Patchy recovery in European car sales continues

Reuters

* May registrations up 4.3 pct at 1.13 mln cars - ACEA

* EU has 2nd-lowest sales result for month of May since 2003

* Italy, France underperform; Germany, UK see strong growth

* European 5-month car sales up 6.6 percent (Adds analyst comments, detail and background)

By Andreas Cremer

BERLIN, June 17 (Reuters) - New car sales in Europe continued their gradual recovery in May, though high unemployment held back demand, with mass-market brands outperforming premium models, data showed on Tuesday.

Registrations in the European Union and the countries of the European Free Trade Association rose by 4.3 percent to 1.13 million cars, the Association of European Carmakers (ACEA) said.

That was the ninth straight monthly increase, adding to signs Europe's car market is recovering from a six-year slump.

But the improvement is from a low base and spread unevenly across the region, while analysts said excess production capacity as well heavy discounting and other incentives for buyers were distorting the true level of demand.

"It's a patchy recovery that's not particularly strong," said Jonathon Poskitt, head of European forecasting for LMC Automotive. "We need unemployment to decline before we can expect a more concerted recovery."

Unemployment remains near a record high of 12 percent in the 18-nation euro zone.

ACEA said the overall level of deliveries in the European Union in May was the second lowest for that month since 2003.

Auto sales in France and Italy, Europe's third and fourth biggest car markets, posted little or no growth in May, while the countries hit hardest during the euro zone debt crisis saw a surge in demand, helped by incentives and subsidies.

Deliveries increased 17 percent in Spain, 37 percent in Portugal and 42 percent in Greece.

Germany, Europe's biggest economy and car market, also contributed to the growth, with sales rising 5.2 percent after contracting 3.6 percent in April, while Britain saw growth of 7.7 percent.

Five-month sales across the region of 30 countries excluding Malta were up 6.6 percent to 5.62 million cars, compared with 5.27 million in 2013.

At a brand level, mass-market manufacturers including Skoda , Renault and Opel posted stronger growth than premium marques BMW and Audi.

Sales jumped 23 percent at Volkswagen's Czech division Skoda, 16 percent at the Renault brand and 6.2 percent at Opel, part of General Motors.

Deliveries at the world's two largest luxury carmakers BMW and VW's Audi rose 1.4 percent and 4.8 percent respectively, while sales at peer Daimler were up 3.6 percent, held back by a 17 percent plunge in deliveries of the Smart city car.

"Renault is benefitting from new models while BMW and Daimler are suffering as a changeover at (BMW's) Mini and the ageing Smart are having an impact," London-based ISI Group analyst George Galliers said.

(Editing by Sophie Walker and Mark Potter)

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