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Car sales in Europe dipped 10.2% to 829,359 units in February, according to the European Automobile Manufacturers’ Association ("ACEA"), driven by continued weak demand and troubles faced by highly indebted banks in financing new car purchases for customers.

Sales in all the major European markets, except U.K. decreased in the month. Sales tumbled 17.4% in Italy, 10.5% in Germany, 12.1% in France and 9.8% in Spain. However, sales in the U.K. grew 7.9% in the month.

Sales by Automakers

Among the U.S. automakers, Ford Motor Co. (F - Analyst Report) saw the steepest decline in sales in February. The automaker’s sales plunged 20.8% to 53,660 cars in February. As a result, Ford is cutting back its European production capacity and pursuing three plant closures. It was followed by General Motors Company (GM - Analyst Report), which registered a 20.1% fall in sales, driven by a 38% decline in Chevrolet brand sales.

Among the European automakers, Volkswagen AG (VLKAY) – biggest in the continent – posted a 7.2% decrease in sales, led by a 12% fall in its Skoda brand sales. Meanwhile, sales at Fiat SpA (FIATY), PSA Peugeot , Renault, BMW and Daimler AG (DDAIF) shrank 16.0%, 13.0%, 8.6%, 2.8%, and 1.7%, respectively, in the month.

Korea’s Hyundai Motor Corp. and Japan’s Honda Motor Co. (HMC - Analyst Report) and Mazda are the only three automakers that registered a sales gain in Europe during the month. Sales at Hyundai went up 1.4% while sales at Honda and Mazda escalated 27.0% and 13.1%, respectively.

Europe versus U.S.

Car sales in Europe reached its lowest level of 12.05 million units in 2012 since 1995, according to ACEA. The decline was the steepest in the highly troubled euro zone, where car sales dipped 11.3% to roughly 9 million units, according to Reuters.

Auto sales in the U.S. rose modestly by 3.7% year-over-year to 1.19 million vehicles in February. This translated into a seasonally adjusted annual rate (SAAR) of 15.4 million units for the year, up about 2% from 15.1 million units registered in the same month of 2012.

Sadly, the growth rate in sales came at the lower end of the 4%–6% projection made by and a few days back. This can be attributed to rising gas prices (up 36 cents to $3.78 per gallon in February) and turbulence in the stock market. However, improving construction market, cheap financing and strong pent-up demand kept the recovery in the U.S. auto industry on track.

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