Peugeot was one of several brands offering strong incentives to buyers in Germany last month

Peugeot was one of several brands offering strong incentives to buyers in Germany last month

In contrast to the buoyant US, or the tiny New Zealand market, new car registrations across Europe were generally lacklustre in May after a rebound in the first few months of the year, although sales in Germany and Spain were higher due to incentives and subsidies, a news agency analysis showed on Wednesday (4 June).

Though there have been signs of recovery from a six year slump, excess production capacity, heavy discounting and incentives continued to distort the true level of demand, Reuters reported.

New car registrations in Germany rose 5% in May, helped by incentivised sales by the likes of General Motors' Opel and Citroen.

"While the year-on-year increase has to be seen in the context of a relatively easy comparison, it is worth looking at the SAAR (seasonally adjusted annual rate) of 3.2m [sales] - the highest level since June 2012," International Strategy and Investment UK said on Wednesday.

The ISI forecast sales in Germany would grow 3.5% this year, adding that based on overall growth this year, the market was "well on track to achieve this".

According to Reuters, analysts said German sales actually dropped if two extra sales days in May this year compared with the same month a year ago were excluded, and that followed a 4% fall in April.

"We have seen incentives go up in Germany and the most generous incentives are being offered by Peugeot, Citroen and Opel," Mike Tyndall, an autos analyst at Barclays, told Reuters.

Average incentives, or discounts, for Peugeot and Citroen were at 24%, while Opel's were 25%, Tyndall said, adding that German sales were further flattered by the fact that registrations a year ago were particularly weak.

Sales of Mercedes-Benz and BMW fell 0.5% and 5% respectively as both automakers review the cost structure of their German operations and stop short of heavy discounting. Sales of Volkswagen brand cars rose 2%.

Elsewhere in Europe, the market proved uninspiring, according to Reuters.

Transport ministry data showed sales in Italy fell 4% year on year with Fiat Chrysler Automobiles volume down while GM was off 23%.

"The caution we exercised over the modest rises seen in the first few months of 2014 is unfortunately vindicated in the May number which we think is not a sign of slowdown but of stagnation ... no pickup therefore," Filippo Pavan Bernacchi, president of car retailers' group Federauto, said.

Spanish car sales rose 17% while French sales inched 0.1% higher.

May sales in Spain marked the ninth straight month of increases, car manufacturers' association Anfac told Reuters, after a government subsidy scheme helped to encourage buying.