More Europeans bought new cars in June. Sales were up 4.3 percent from a year ago.
That reflected an economic recovery in southern Europe – with big rises in Spain and Portugal – as well as new product launches and heavy price discounting.
The Association of European Carmakers said it was the 10th consecutive month of increases.
However, the June rise comes from a low base and was spread unevenly across Europe.
And it is the cheaper vehicles that are selling – such as Dacia, Skoda, Seat and Opel.
Analysts also said dealer incentives are distorting the true level of demand.
Retail incentives across Europe’s top five markets increased 10 percent year-on-year to a record 2,748 euros per vehicle, according to data from a major independent market research firm.
“As we move into the second half, consumers are likely to replace ageing vehicles, driven by a recovery in western Europe’s labour market and positive consumer sentiment due to an improving economic scenario,” said Ernst & Young senior automotive partner Peter Fuss.
He added that the car sales growth momentum is likely to continue for the rest of the year which should reduce the price cuts: “We anticipate discounts and self-registrations to decline gradually as economic fundamentals improve and the replacement cycle returns to normal.”