(Bloomberg) -- Car sales in Europe fell in September for the first consecutive monthly decline in more than two years as the region’s economy continued to stagnate and consumers trimmed spending.
New-car registrations fell 4.2% compared to a year ago, to 1.12 million units, the European Automobile Manufacturers’ Association said Tuesday. Gains in electric-vehicle sales weren’t enough to offset declines for combustion-engine models.
European automakers have struggled to improve sales in their home market as a protracted downturn and higher interest rates cut into spending. Stellantis NV, the owner of brands including Fiat and Peugeot, posted one of the biggest drops, with registrations plummeting 26% in the region.
“The industry remains in crisis mode,” Constantin Gall, EY’s mobility lead for western Europe, said in a note. “There is no positive impetus towards the end of the year — the economy is weakening, the considerable geopolitical tensions are not easing and are causing uncertainty among both private and commercial customers.”
While sales picked up slightly in the UK and Spain, they fell in Germany, France and Italy, pulling down total deliveries across the region.
Sales of EVs bounced back in September, a welcome sign for the industry that’s seen demand for fully electric cars decline after governments pulled subsidies last year. EV deliveries jumped 24% in the UK, where carmakers are heavily discounting to try to comply with the government’s zero-emissions vehicle sales mandate. In Germany, where the government is discussing the potential of new incentives, EV sales increased 8.7%.
Year-to-date, EV sales in the region are still down 2.6%. The outlook has been complicated by planned tariffs on Chinese-made EVs of as high as 45%, which are scheduled to take effect in the coming weeks. The EU and China have pledged to work toward an alternative agreement that would avoid the need for levies, and German Chancellor Olaf Scholz reiterated his opposition to the tariffs on Monday.
With consumers balking at the high costs of owning EVs, Europe’s biggest automakers are now trying to revive sales with lower-cost models. Renault unveiled its new €25,000 ($27,053) R5 last week, while Stellantis started shipping its €23,300 Citroën ë-C3 city car in mid-September.
The region’s biggest automaker, Volkswagen AG, is weighing unprecedented factory closures in Germany due to falling demand. Its sports car brand Porsche AG and rival Mercedes-Benz Group AG have adjusted their EV ambitions over less-than-expected momentum for plug-in models.
A Europe-wide downturn in EVs increases the risk for manufacturers like VW, Stellantis and Renault to pay fines of as much as €15 billion if they fail to meet tighter European fleet-emission rules are set to kick in.
--With assistance from Craig Trudell.
(Updated with analyst comments in fourth paragraph.)
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