Europe Car Sales Up 6.5%, But Growth Relied On Discounts As European Economy Slowed

New-auto sales in the European Union increased for the 14th consecutive month in October, led by double-digit growth in the U.K. and Spain--and despite a decline in France. New passenger car registrations, the E.U.'s gauge for measuring new car sales, increased 6.5 percent from a year earlier, to about 1.07 million vehicles, the European Automobile Manufacturers Association said Tuesday.

But automakers have resorted to incentives on sales and trade-ins to fuel this growth as the 18-nation euro economy, which includes the major E.U. car markets, grew an anemic 0.6 percent in the third quarter. Regional powerhouse Germany has been showing signs of deceleration and Italy recently entered a triple dip recession. More than 24 million people in the euro zone are unemployed with a regional jobless rate of 11.5 percent in September. France, Europe’s third-largest auto market saw a 3.8 percent decline in new-vehicle registrations.

IHS Automotive analyst Carlos de Silva told Automotive News last month that sales are being supported by incentives and trade-in specials, and that cars are being purchased on the basis of “need” rather than “want” as consumers replace aging clunkers. De Silva said by email on Tuesday that October's sales data "strengthens the idea that 2014 should end on a positive note for the region overall."

IHS Automotive estimates E.U. new-car sales will increase by 5.5 percent this year, to 12.5 million units. That's down from a record 16 million vehicles in 2007.

The market leader Volkswagen sold one out of every four new passenger cars and increased sales 6.9 percent on the back of a 20 percent rise in SEAT, the group’s most affordable brand. Germany’s main luxury automakers showed improvement from this time last year with Mercedes-Benz maker Daimler up 2.2 percent and BMW up 9.4 percent.

Among U.S. car companies, Ford Motor Co.’s registrations were up 4.3 percent while General Motors’ Opel/Vauxhall unit sales were up 12 percent.