European car sales continue to accelerate

Cheap oil, falling unemployment and growing economic confidence helped sustain momentum in the European car market in March.

Acea, the automotive manufacturers' body, said on Thursday morning that sales across the European Union rose 10.6 per cent last month compared with March 2014.

In total, 1.6m passenger cars were registered across the EU in March, the 19th consecutive month of growth.

The news caps a blistering start to the year for Europe's carmakers, who have been helped by a combination of strong sales and the tailwind provided by a weak euro.

Shares in companies such as Volkswagen - the biggest carmaker in Europe on most metrics - PSA Peugeot Citroen and Fiat Chrysler Automobiles have all risen by a third or more in the year to date.

Stuart Pearson, analyst at Exane BNP Paribas, said: "Manufacturers have clearly been surprised by the demand appetite in Europe so far this year, and with production now likely responding, we could see sales momentum continue."

Faurecia, the French component maker, on Wednesday upgraded its forecast for growth in European light vehicle production from 2-4 per cent to 3-5 per cent.

In 2014, Europe recorded its first calendar year of growth since the financial crisis, ending a bruising six-year decline that left sales wallowing at two-decade lows.

Each of Europe's big five markets registered strong growth in March. Spain, the smallest of the five, led the way with a 40.5 per cent rise, though this was boosted by the country's rolling scrappage scheme.

Italy, the fourth-biggest market, followed with 15 per cent growth. France and Germany came in at around 9 per cent, while the UK was up a more modest 6 per cent - though this was still a record March for the country.

That meant that first-quarter sales in the EU rose 8.6 per cent, totalling 3.5m units for the January to March period.

However, Peter Fuss, automotive advisory partner at consultancy EY, said there was "significant" concern over self-registrations, where dealers sell the cars to themselves to help shift vehicles and meet incentive targets. "They continue to distort the true level of demand," he said.

He also cautioned that the wider European picture was clouded with uncertainty, with Russian car sales down 42.5 per cent in March.

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