UPDATE 2-Europe's car market recovery continues, France lags

Mon Mar 3, 2014 12:53pm EST

* German Feb car sales rose 4 pct year-on-year

* French Feb car sales fell 1.4 pct year-on-year

* Italian Feb car sales rose 8.6 pct year-on-year

* Spanish Feb car sales rose 17.8 pct year-on-year (Adds German, Italian figures, changes dateline to GENEVA)

By Edward Taylor

GENEVA, March 3 (Reuters) - Strong car sales figures from Germany, Italy and Spain added to the growing optimism over Europe's autos market as industry executives gathered on Monday for the Geneva motor show, though a dip in French demand suggests the recovery remains uneven.

Car sales in Germany, Europe's biggest autos market, climbed 4 percent year-on-year to 209,400 vehicles in February, leading German industry association VDA said.

"We're convinced that the auto spring which traditionally kicks off with the Geneva show will be much stronger and much more lively than a year ago," said VDA president Matthias Wissmann in a press conference at the Geneva show.

"The outlook has brightened up sharply."

Europe's car industry is battling to recover from a six-year slump in sales, when consumers held back spending particularly in those countries hit by austerity measures following a sovereign debt crisis.

The mood has brightened recently as even the worst affected countries move out of recession. Industry figures for January showed European car sales rose 5.2 percent, lifted by demand for compact cars in all major markets, including in former crisis spots like Portugal, Ireland, Italy and Greece.

VDA did not give a definitive forecast for this year, but said it expected a 2 percent rise in sales to 11.7 million cars in Western Europe, if economic conditions remain favourable.

German automakers have a combined market share of around 50 percent in Western Europe, VDA added, meaning any recovery in the region would see firms such as Volkswagen and BMW benefit disproportionately.

New auto sales also leapt 17.8 percent in Spain last month to 68,763 cars, thanks in part to government subsidies, car manufacturers' association Anfac said. That was the sixth consecutive monthly increase.

Under the government subsidy scheme PIVE, buyers of new cars who turn in an older car receive a 2,000-euro rebate, half from the state and half from the car dealer. The subsidy has been extended four times and continues to drive sales.

New car sales in Italy rose 8.6 percent to 118,328 vehicles in February, its transport ministry said.

"There is underlying growth in the European car market, there is a lot of optimism around," Allan Rushforth, chief operating officer at Hyundai Motor Europe said on Monday.

FRANCE LAGS

However, French car registrations fell 1.4 percent to 141,300 cars last month, according to the country's CCFA association.

The dip, which ended almost five months of straight sales gains, was mainly felt by premium automakers such as Volkswagen, which saw its sales fall 7.1 percent, while Peugeot and Renault saw their sales rise 4.2 percent and 1.7 percent respectively.

Analysts mostly expect a modest recovery in European car sales this year.

Researchers IHS Automotive, for example, expect sales in the European Union to rise 2.7 percent to just over 12 million.

Moody's also sees a rise in light vehicle registrations of about 2 percent in Western Europe this year.

However, that would still leave registrations about 20 percent, or 3 million vehicles, below pre-crisis levels in 2007.

VDA said that in addition to a recovery in Western Europe, it saw the global passenger car market growing 3 percent to 75 million vehicles in 2014, pushed by a 7 percent rise in sales in China, a 3 percent increase in light vehicles sales in the United States and 2 percent growth for both India and Brazil.

Data on Monday showed U.S. auto sales in February were more brisk than expected as hefty incentives lured customers into dealerships despite cold and snowy weather. (Reporting by Sarah Morris in Madrid, Andy Callus in Paris, Andreas Cremer and Jan Schwartz in Hamburg, and Stephen Jewkes in Milan; Editing by Mark Potter)

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