Car sales for June in the European Union fell to their lowest point since 1996, prompting analysts to warn the data could get worse before it gets better.
New car registrations in the EU dropped 5.6 percent in June to 1.175 million cars from a year ago, after falling 5.9 percent in May, according to figures released by the automotive industry body ACEA on Tuesday. May's level was the lowest level for 20 years .
Carlos Da Silva, manager for European vehicle sales forecasts at IHS Global Insight, told CNBC that though car registrations were "at the bottom of the bottom" there would not be an improvement in the figures until next year.
"Maybe in the first half of 2014 we'll see a real restart but it will be a very staggered recovery in Western Europe," Da Silva told CNBC on Tuesday.
Peter Fuss, senior advisory partner of Ernst and Young's Global Automotive Centre told CNBC that car sales could slow further. "We anticipate the decline in car sales to slow down during the second half and the Western European market to dip by 4 to 6 percent for the whole year. Further, growth in car sales is likely to be flat during 2014. With replacement demand building up, the market is expected to assume growth path from 2015 onward," he told CNBC.
In the first half of 2013, 6.2 million new cars were registered in the EU - 6.6 percent less than in the same period in 2012. The U.K. was the only market to expand (by 10 percent) while all other major markets faced a downturn.
(Read More: Why The UK's Auto Industry Remains Crisis Free )
In Germany, the market contracted by 8.1 percent, in France by 11.2 percent and in Spain, by 4.9 percent. The decline comes after European car sales experienced an optimistic bounce in April before falling to a two decade low the following month.
Shares of Fiat (Milan Stock Exchange: FI-IT), Peugeot Citroen (Euronext Paris: UG-FR), VW Group (XETRA:VOW3-DE) and General Motors (GM), which all experienced sales declines in June, traded lower on Tuesday.
Ernst and Young's Fuss told CNBC that luxury carmakers, which almost "defied the recession" during the first half of 2012, have also suffered declines this year.
"Automakers' margins face continued pressure as they are forced to prop up sales through self-registrations, record levels of discounts and other freebies such as interest-free car financing and free insurance," Fuss said.
(Read More: US Auto Sales Spike in June to Pre-Recession Levels )
IHS' Da Silva said some companies were more at risk than others: "Companies like Peugeot Citroen and Fiat are the most at risk right now because these brands are so euro zone and European-centric - their profitability relies on Europe and they need to quit this over-dependence," he told CNBC.
"Whereas companies like Renault, however, have really leveraged their efforts in Russia, South America and India."
Da Silva said that while Peugeot CitroÃ«n had tried to expand into Chinese and South American markets, the "scale of the effort is not efficient enough."
"Investment is a long-term thing and they need to try to survive through this hard time to when it gets better."
A number of car manufacturers have announced the closure of car plants, including Peugeot Citroen which said it would close a plant in France in 2014 with the loss of 8,000 jobs. That decision prompted drawn out protests from the workers.
(Read More: Car Sales on a Roll, but the Economy? Not So Much )
Da Silva said, however, that rather than shut down factories as a result of fewer car sales, many plants were now operating at a lower capacity . Figures from consultancy IHS in June showed that more than half of Europe's 160 car plants operated below 70 percent of their total capacity in the first quarter of this year.
"Reducing capacity at plants is a less visible way of closing plants. Normally a plant would have two or three lines producing cars, now there are only one or two."
On why the U.K. car market was doing better, Da Silva said this was due to the fact that it was "decoupled" from Europe, though he said he was surprised by the extent of the downturn in Germany, a traditionally buoyant car market. "There is no logical reason for the downturn there. Germans are buying real estate and making long-term investments. So, although the Germans are spending money, they're just not buying cars ."
More From CNBC
- More of Europe's Car Plants Will Have to Close: Expert
- Why The UK's Auto Industry Remains Crisis Free
- Auto Sales Spike in June to Pre-Recession Levels