(Bloomberg) -- European car registrations fell sharply in June, resuming a downward spiral this year that has seen profit warnings at German manufacturer Daimler AG (DE:DAIGn) and a quarterly automotive division loss at rival BMW AG.
Sales dropped 7.9% to 1.49 million cars, the European Automobile Manufacturers’ Association said Wednesday, the worst monthly decline since December. France and Spain had falls of more than 8%, while German and U.K. sales fell 4.7% and 4.9% respectively.
While the industry group blamed the June drop on fewer working days during the month, the weak showing adds to the gloom enveloping the sector and brings the fall to 3.1% since the start of 2019. Daimler (DE:DAIGn) last week issued its fourth profit warning in just over a year due to the costs of a recall and allegations of emissions-tampering in diesel cars. The carmaker also blamed weaker global markets. BMW (DE:BMWG) in May reported its first loss in a decade in the main automotive division.
At the year’s half-way mark, Europe is likely facing a second annual decline in car sales. The industry association has already revised its prediction for the year to a 1% drop, blaming uncertainty surrounding Brexit and flattening demand. It had previously forecast a 1% rise. Before last year, the industry had enjoyed uninterrupted annual growth since 2013.
“We’re standing in front of a difficult second half of the year,” said Peter Fuss, a partner at EY consultancy. “Little positive impetus for the new car market in the EU can be expected in the coming months.”
In addition to weakening markets, a truce in the U.S.-China trade spat remains delicate. U.S. President Donald Trump said late Tuesday he could impose additional tariffs on Chinese imports if he wanted to, after promising to hold off on more duties last month. Tensions between the two nations have hurt China’s economy, prompting car sales to slump, and have hurt the export of U.S.-made cars from BMW and Mercedes-Benz.
The Stoxx Europe 600 Automobiles & Parts Index declined 0.4%. Volkswagen (DE:VOWG_p) AG fell 0.1% in early European trading, while Renault SA (PA:RENA) dropped 0.6%.
More Optimistic
French automaker Renault SA was more optimistic on Tuesday, saying it expects European vehicle sales to remain stable this year, barring a hard Brexit. While the French carmaker expects some recovery in volumes during the rest of 2019 thanks to new models, it sees the global car market shrinking by around 3%.
Renault’s partner Nissan Motor Co. was the worst hit during the first six months of this year, registering a 24% drop in European sales. Honda sales fell 15.4% and Fiat-Chrysler saw a 9.5% decline.
In May, European car sales rose 0.1%, an unexpected and slight reprieve in a nine-month run of lower sales. The market benefited from trade-in incentives for older diesel cars and two additional shopping days that month.
The possibility that the car market has passed a peak would come at a particularly unfavorable time for manufacturers, who are scrambling to pay for an unprecedented shift to electric and autonomous vehicles. Battery-powered car sales are still a fraction of the total, something that could change as tough emissions regulations come into effect next yea
