European Car Sales See First Rise In Over A Year

BRUSSELS (AP) -- European car sales rose in June for the first time in over a year thanks to government "cash-for-clunkers" handouts, car makers said Wednesday.

Manufacturers' group ACEA said sales were up 2.4 percent to 1.46 million units, the first increase after 14 months of falling sales.

It warned that sales for the first six months of the year were down 11 percent from a year ago as nearly a million fewer cars left showrooms. Car producers are cutting back, it said, and car output will likely fall by a quarter this year and by more than half for vans and trucks.

It is also worried that sales will plunge suddenly next year, when governments end payments for car buyers who trade in an old model for a new fuel efficient car.

The state incentives have fired up car sales this year. Germans get euro2,500 ($3,500) in cash for swapping their cars. This has accelerated sales by 40.5 percent in June in Europe's biggest market and by 26 percent for the first half of the year compared to 2008.

Sales also were up last month in two other nations with the programs: in Italy by 12.4 percent and in France by 7 percent.

ACEA said the handouts for car buyers had cushioned tumbling sales in Spain, down 15.9 percent and Britain, down 15.7 percent. Both countries have been hit hard by collapsing house prices which has held shoppers back from big purchases.

Most major manufacturers saw sales grow in June. Sales at Europe's top seller Volkswagen AG rose 9.5 percent, while Italy's Fiat SpA saw a 11.7 percent gain as its cheaper small cars sold strongly. PSA Peugeot Citroen sales increased 4.4 percent, Ford Motor Co. rose 2.2 percent and Renault was up 3.4 percent.

Luxury car makers did badly. BMW sales fell 10.9 percent and Daimler was down 2.7 percent. General Motors Corp. was also down, by 8.4 percent, while Toyota fell 4 percent.

ACEA said the incentives are helping sales of small cars but are failing to make a major dent in overall demand this year.

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