The European Union car market slumped to a 17-year low point after shrinking for 18 months under the pressures of economic reforms on business and household budgets, trade data showed on Tuesday.

Sales fell by 5.6 percent in June and by 6.6 percent in the first half of the year.

But French group Renault held up in June with its low-cost Dacia brand, riding far higher than its struggling rival Peugeot Citroen.

Only in Britain are sales recovering, gaining ground strongly for several months. Manufacturers in Britain are hoping that sales this year will exceed the figure of 2.04 million in 2012.

Meanwhile the giant German group Volkswagen limited the damage to its sales.

The German auto industry has shown resilience to the depressed trading conditions in Europe, notably with a strong exports performance to emerging markets.

But German auto firms are also finding market conditions  hard. They expect domestic sales, the biggest European market, to fall to 2.9-3.0 million from 3.083 million last year.

The head of German top-of-the-range car maker BMW, Norbert Reithofer, told the financial daily Boersen-Zeitung on Tuesday: "Overall, the market in western Europe will contract by around 5.0 percent this year and remain a huge challenge for carmakers."

Furthermore, the situation could last until the middle of next year, he warned. "Maybe we'll see a slight pickup in the market during the second half of 2014," said Reithofer.

The latest data, from the European Automobile Manufacturers' Association, casts a shadow over some signals that the EU economy may be recovering slowly, since in several EU countries the manufacturing of cars is an important indicator of production, exports and consumer confidence.

French manufacturers see their national market contracting this year by 8.0 percent to the lowest level since 1997.

The depressed figures reflect the impact of low growth and budget reforms on business and household spending in the European Union where several countries are in recession or bumping along with low growth.

The car market in the EU shrank further in June to the lowest level for 17 years.

In the first six months of the year, sales fell by 6.6 percent to a total of 6.205 million, although the British market, the only one to expand, grew by 10.0 percent.

The EU car market has been shrinking for 18 months, with one small upward blip in April when there were two more working days than in the same month last year.

In June, sales fell by 5.6 percent on a 12-month comparison across the European Union to a total of 11.3 million, the lowest volume since 1996.

AFP