EU car sales post biggest drop in 20 years

The EU car industry was again badly hit by weak demand in May when sales plunged even in the so-far resilient German market, monthly data from the European Automobile Manufacturers\' Association showed on Tuesday. The British auto market was the only one in 26 of the 27 countries of the European Union to show an increase on a 12-month comparison. The association said that sales in the European Union in May fell by 5.9 percent to 1.04 million vehicles, the worst performance for May since 1993. In the first five months of the year, sales in the European Union, excluding Malta, fell by 6.8 percent. In April, auto sales in the EU area had staged a modest rally of 1.7 percent but this was because the figure for the comparable period, in April 2012, had been particularly weak, and also because the Easter holiday fell in March this year, pushing some sales forward. Sales in Germany fell by 9.9 percent in May on a 12-month basis. Germany is both the leading producer of cars in Europe, achieving record export performances, and has also been a strong market for autos, in contrast to weak sales in European countries suffering from weak growth and even recession. The EU market in general and the German market in particular are important to countries in central Europe such as the Czech Republic where auto production for export is a big driver of the economy. Sales of autos in Spain, Italy and France fell. In France, sales by PSA Peugeot Citroen slumped by 13.2 percent, and sales by Renault and its Dacia brand, based in Romania, fell by 10.0 percent. PSA is struggling to overcome a financial crisis and to manage deep restructuring. The weakness in the EU auto market, reflecting weak consumer confidence and spending and also weak investment by businesses, has cut deeply into demand for steel, adding to pressures on European steel manufacturers, such as ArcelorMittal.