PARIS/TURIN French, Italian and Spanish car sales tumbled in June, rounding off a gloomy first half for Europe's auto industry where even the German market may not escape the effects of grim economic conditions.
Already struggling automakers such as PSA Peugeot Citroen (PEUP.PA) and Fiat FIA.MI suffered as southern European car markets plumbed new lows, according to data published on Monday, a day before German registrations are expected to come in broadly flat.
Industry executives are having to tone down recovery hopes as the crisis deepens, making tentative restructuring moves by Peugeot and General Motors (GM.N) look inadequate and raising pressure on those yet to act.
"We're standing in doo-doo," Fiat Chief Executive Sergio Marchionne told reporters in Turin on Sunday. "Whether you're in an inch of it or three inches doesn't matter, the stench is still overwhelming."
In Germany, where deliveries turned negative in May, rising discounts and automaker self-registrations - selling new cars as used - suggest Europe's biggest market can no longer be relied upon to soften the slump.
"The auto sector crisis is on a European tour," London-based Credit Suisse analyst Erich Hauser said. "Germany is starting to feel the ripple effects."
Italian registrations plunged 24 percent to record the worst June since 1979, manufacturers' association UNRAE said, while French sales slid further toward an expected 10 percent full-year decline.
The Spanish car market also shrank 12 percent as frantic discounting failed to avert a 24th straight monthly fall, according to the country's ANFAC grouping.
"People aren't taking advantage of some of the best offers on record," the association's economist Aranzazu Mur said.
According to an MSI study commissioned by Spanish dealers, full-year auto registrations are likely to fall to a quarter-century low of 720,000 from more than 1.6 million in 2007.
Ford (F.N) sales halved in Italy, where GM's Opel deliveries fell 44 percent and Fiat's dropped by a quarter, in line with the market. In Spain, the two U.S. automakers posted declines close to 20 percent, while Renault (RENA.PA) fell 23 percent and Citroen 13 percent.
For the first half, registrations were down 14 percent in France, 20 percent in Italy and 8.2 percent in Spain.
The euro-zone debt crisis and sagging consumer demand are weighing on earnings at mid-market automakers that had already struggled, or failed, to stay profitable in Europe last year.
Ford has blamed Europe for overseas losses expected to have tripled in the second quarter from the $190 million recorded in the first.
Fiat and Peugeot, heavily exposed to the worst affected markets, are also expected to report significant first-half automotive losses in the region later this month.
Only two European car factories are so far earmarked for eventual closure - Peugeot's Aulnay plant near Paris and GM's Opel facility in Bochum, Germany.
Even their immediate decommissioning would barely dent a 7 million-vehicle gap between the region's production capacity and projected output for the next three years, according to an AlixPartners study published last week.
"European production is going to have to adapt to demand in the end," the consulting firm's managing director Laurent Petizon said. "Only then will automakers return to profitability."
Ford's French car registrations dropped 21 percent last month, while Fiat's fell 17 percent and Paris-based Peugeot recorded a 9.5 percent combined sales decline for its two brands at home.
The French market was down just 0.9 percent overall, thanks to an additional day of sales compared with June 2011 and purchases carried over from May - when business was disrupted by a presidential election and public holidays falling on weekdays.
Sales excluding the extra day fell 5.6 percent, France's CCFA industry association said, predicting a full-year market performance "near the bottom end" of its previously forecast 8-10 percent decline.
German incentives are near record highs as the euro zone's persistent debt crisis spooks consumers, according to a monthly index published by the University of Duisberg-Essen's Centre for Automotive Research.
In a rare move by a German premium brand, Daimler's (DAIGn.DE) Mercedes plans to offer launch incentives on its new A-Class subcompact, according to an Automobilwoche report.
"May's decline may have marked the turning point for the German market," said Martin Benecke, a Frankfurt-based analyst with IHS Automotive, adding that Fiat and Peugeot were leading the price offensive.
"We're braced for weaker business in the second half," he said.
(Reporting by Christiaan Hetzner, Andreas Cremer, Gilles Guillaume, Paul Day. Editing by Jane Merriman)