‘05 European Car Sales Limp

New-car sales in Europe fell 3.9% in December, ending 2005 on a weak note despite a ferocious price war, a slew of fresh models and strong showings by most Japanese manufacturers, industry data indicated Monday.

The third consecutive month of waning sales offered scant hope that demand would pick up in 2006 and help relieve pressure on carmakers hit by high prices for energy and raw materials.

Declines in big markets Germany, Italy, France and Spain offset a rare rise in Britain in December, limiting new-car registrations in the 23 European Union countries as well as Norway, Switzerland and Iceland to just below 1.1 million units.

“This drop was influenced by a smaller number of working days in almost all countries ... but also confirms the sluggish market conditions in the last quarter,” European car industry association ACEA said.

Full-year 2005 sales slipped 0.7% to 15.2 million units as Western Europe held nearly steady and an influx of used cars triggered a 10% slump in Eastern Europe.

Almost all Japanese carmakers continued to encroach on European companies’ market share last month, while South Korean manufacturers had unusually weak showings. Volkswagen outpaced the market while Renault continued to struggle.

Registrations for South Korea’s Kia Motors Corp. slumped 28% in December but advanced 39% in 2005, giving it bragging rights as the fastest-growing brand in Europe as it overtook Suzuki and Mazda sales in the region.

Suzuki Motor Corp.’s December registrations rallied nearly 31%, Honda Motor Co. sales gained 18% and Toyota Motor Corp. grew about 16%, but Nissan Motor Co.’s sales tumbled 42% despite an upturn in Britain, its largest European market.

The British market -- Europe’s second-largest after Germany -- contracted 5% in 2005 as relatively high interest rates and flagging consumer sentiment took their toll.

Germany, France and Spain managed to grow while the Italian market eased.

Analyst Stephen Cheetham at Sanford C. Bernstein & Co. said the European market would grow only 1.3% in 2006 given feeble economic growth, consumer hesitance, a lack of pent-up demand and the low average vehicle age in all markets except Germany.

Toyota, rapidly gaining on General Motors Corp. in the race to be the world’s largest automaker, boosted European 2005 registrations 3.9%, including of its premium brand, Lexus.

Volkswagen, Europe’s largest carmaker, said that its full-year share rose to 19.3% from 18.6% in 2004 and that only its Spanish brand, Seat, lost ground.

DaimlerChrysler’s December share slipped below 6% as a 28% plunge at its Smart mini-car business and weaker Mercedes-Benz sales offset higher Chrysler-brand volume.

BMW, the world’s largest premium automaker, saw registrations slip almost 5% in December, but they gained nearly 10% for the year thanks to a model offensive at its core BMW brand and higher sales of its Mini brand.