German March Car Sales Drop 17% on Europe Economy Concern

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German new car sales fell the most in almost 2 1/2 years last month as renewed skepticism over the handling of the sovereign-debt crisis in Europe discouraged consumers from making large purchases.

Registrations in March dropped 17 percent from a year earlier to 281,184 autos, the German Federal Motor Vehicle Office, or KBA, said today in a statement. The drop was the biggest since October 2010, a spokeswoman for the Flensburg-based KBA said in an e-mail. First-quarter sales fell 13 percent to 673,957 vehicles.

German unemployment rose while business confidence and an index in consumers’ willingness to buy fell in March as a botched bank bailout in Cyprus increased concerns the euro region’s recovery will falter. The economy of the 17 countries using the euro has contracted for five consecutive quarters, and Germany’s gross domestic product shrank in the final three months of 2012.

“Worries in the debt-ridden southern European countries are spreading to the German market,” said Christian Ludwig, a Dusseldorf, Germany-based analyst with Bankhaus Lampe. “The cold weather in March with ice and snow and the Easter holidays were one-time effects that didn’t help.” Easter took place in March this year, versus April in 2012.

PSA Peugeot Citroen, Europe’s second-biggest carmaker, posted the steepest drop in German sales last month among the region’s top five auto manufacturers, with a 41 percent plunge at the Peugeot brand and a 36 percent slide at the Citroen marque, according to the KBA figures.

German sales by the namesake division of Volkswagen AG, Europe’s biggest carmaker, fell 21 percent, and its Audi luxury brand posted a 9.7 percent decline, the KBA said. Registrations gained at VW’s Seat and Skoda divisions.

“I expect the market to stabilize in the second quarter,” Matthias Wissmann, president of the German carmakers association, or VDA, said in a separate statement. “The economic outlook for Germany is still robust.”

Car production at German plants was reduced by 13 percent to 474,900 vehicles in March, bringing the three-month volume decline to 11 percent, the VDA said.