European car sales decline again

Fiat's Stilo: The Italian carmaker posted the biggest drop in sales in May

BRUSSELS, Belgium (CNN) -- Western Europe new car sales plunged in June amid a gloomy economic climate as company's continue to slash jobs, denting consumer confidence.

Italy's Fiat, General Motors of the U.S. and France's Renault and Volkswagen were the hardest hit by falling sales, while BMW and DaimlerChrysler improved their market share.

New car registrations totalled 1,275,692 units in June, down 8 percent from a year earlier, the European Automobile Manufacturers Association (ACEA) said on Thursday. Within the 15-member European Union, ACEA said sales dropped 8,1 percent year-on-year.

But ACEA was still holding out for a recovery in the second half of the year: "The relative weakness of the market in the first-half of the year, due to the general economic climate, has now stabilised. The market should partly recover in the second half of the year, before going back to a growing trend in 2003."

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Europe's biggest economy, Germany, is stumbling out of recession and a raft of bankruptcies. The 111-year-old engineering group Babcock Borsig, which employs 13,000 people in Germany, construction giant Philipp Holzmann, the Kirch media group, stationery company Herlitz and aircraft manufacturer Fairchild Dornier have all filed for insolvency.

Unemployment in Germany and France is running as high as 9 percent, while the European Union expects the economy to grow this year at its slowest pace since 1993, up by just 1.4 percent.

The ACEA said that during the first six months of 2002, new car sales fell 4.5 percent in western Europe and the EU. Analyst expect sales to decline by 5 percent this year.

Italian carmaker Fiat posted the biggest decline in June, falling 29.5 percent from a year earlier, while U.S. giant General Motors saw sales drop 15.7 percent.

Germany's Volkswagen lost 6 percent in sales last month and Ford fell 5 percent.

Stronger sales were posted by German carmaker BMW, which gained 18.6 percent in June, while DaimlerChrysler sales rose 3.3 percent.