PARIS: European car sales fell in January, breaking a six-month growth streak as consumer reticence in several markets overshadowed still-robust demand for electrified models.
New-vehicle registrations declined 3.5% to 961,382 last month, the European Automobile Manufacturers' Association said.
France and the region's biggest market Germany led the drop, while sales rose in the UK and Italy.
Buyers in Germany, which made up 22% of Europe's passenger car market last year, are holding out amid high vehicle prices and rising unemployment as core industrial companies cut back, according to EY's Constantin Gall.
While there'll be some boost from fresh EV incentives, the overall weak trend is likely to persist this year.
"The level of sales is set to remain low, in Germany as well as across Europe," Gall said, citing a gloomy economic outlook and volatile geopolitics spreading uncertainty.
With fewer people splashing out on new cars, re-energised growth in EV demand remains a bright spot.
Demand for fully electric vehicles rose 14% in Europe while plug-in hybrids recorded a jump of nearly a third.
Sales of EVs jumped in four of the five top car markets in January, with Germany, Italy, Spain and France reporting growth rates of between 24% and 52%.
Plug-in hybrids also continued to woo customers.
In the UK, hybrid deliveries surged by nearly half even as sales of battery-only models stayed flat.
In Germany, electrified car demand may well rise further after the government unveiled a €3 billion (RM13.8bil) EV subsidy programme in mid-January that targets low- to middle-income earners.
The measure is open to all manufacturers, including those from China.
BYD Co, MG and other Chinese brands have made inroads across Europe last year, accounting for nearly 11% of electrified sales.
"China market share gains will accelerate, as China tries to export its excess auto capacity," Citigroup analyst Harald Hendrikse said in a note.
Carmakers continue to adapt to the volatile EV transition.
Earlier this month, Stellantis NV announced €22.2 billion (RM102bil) in writedowns tied largely to unprofitable EV projects with the maker of Jeep sport utility vehicles and Citroën cars canceling several upcoming models.
Porsche AG and parent Volkswagen AG last year also refocused overly ambitious electric rollout plans with a pivot to add plug-in hybrid models to their lineups.
Volkswagen's namesake brand is set to unveil hybrid versions of the T-Roc SUV and the Golf this fall, while Audi plans to launch the A2 entry-level electric hatchback in the second half of this year.
