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European car-sales jump masks gloomy outlook for industry

Munich

EUROPEAN car sales jumped in September, but the surge had more to do with the year-ago comparison than any respite from longer-term woes in the industry.

Registrations increased by 14 per cent to 1.29 million vehicles, the European Automobile Manufacturers Association said on Wednesday. Sales suffered in the year-ago period after new emissions-test rules took effect.

"The sharp rise in new registrations in September says little about the true state of the car market," said Peter Fuss, a partner at consultancy EY. "More meaningful are the comparison to September 2017 and the development over the course of the year so far - and it is still pointing downwards."

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Carmakers are battling a slowing European economy, where biggest market Germany is at risk of sliding into a recession and UK buyers await the outcome of ongoing Brexit talks. September sales in both countries were "disappointing," forecaster LMC Automotive said in a report, with the UK rising by just 1.3 per cent.

A no-deal Brexit could reduce demand by as much as 15 per cent in Europe's second-largest market, according to LMC.

Euro-area economic growth is forecast to slow to 1.1 per cent this year from 1.9 per cent in 2018, which would be its worst performance in six years. Car demand on the continent has declined 1.6 per cent this year through September to 12.1 million vehicles.

Alongside the economic fallout from trade tensions between the U.S. and China, carmakers are feeling the pinch from the shift to electric cars. From 2020, new European Union regulations on carbon-dioxide emissions will force the industry to step up sales of electrified vehicles with much lower returns than combustion-engine vehicles, or face fines. BLOOMBERG