European Auto Sales Up In July, August

BRUSSELS (AP) -- Government cash-for-clunkers programs across Europe kept car sales rising in July and August amid a gradual economic recovery, the European car makers' association ACEA said Tuesday.

It said some 2.8 percent more cars were sold in July from a year ago, with August sales up another 3 percent. That added to increases in June, the first after 14 months of shrinking sales.

Car makers say the sales turnaround was triggered by government programs that give car buyers a cash payment to swap an older, more polluting car for a newer, more fuel-efficient model. That has also boosted purchases of smaller, cleaner cars.

It also means that some European nations not running such programs -- such as cash-strapped governments like Ireland and Latvia -- are still seeing dramatic falls in sales of new cars as consumers shy away from buying big-ticket items.

That is outweighed by stronger sales in larger nations like Germany, France and Britain. In July, German car sales soared by 29.5 percent while British sales grew for the first time since April 2007, up 2.4 percent. Spain was the only major car market to see a drop, down 10.9 percent.

August sales saw a similar trend, with German sales rising 28.4 percent, Britain increasing 6 percent, France up 7 percent and Italy up 8.5 percent. Spain saw no change in sales in the month compared to August 2008.

Makers of smaller cars are benefiting most from the higher sales. PSA Peugeot Citroen SA, Fiat SpA and Renault SA all performed well in both July and August. Europe's biggest car maker Volkswagen AG had a mixed experience, falling 0.7 percent in July and rising 8.4 percent in August.

Luxury car manufacturers are feeling more pain. Sales of Daimler AG, the maker of Mercedes, contracted by a quarter in August and by 9.1 percent in July. BMW AG saw sales decrease by 5.4 percent in August and 14.7 percent in July.

General Motors Corp., which spent the summer negotiating a sale of its troubled European car unit Adam Opel GmbH, reported a sales drop of 1.4 percent in August after a 5.6 percent increase in July.