The European car market returned to growth in 2014 according to data released by the European carmakers’ trade association Acea.

ACEA said that 12,550,771 new passenger cars were registered in the EU last year, a gain of 5.7% on the previous year. Last year’s growth market was the first since 2007 and the six consecutive years of decline that followed.

Looking at the largest markets, Spain recorded the largest increase over the year (+18.1%) followed by the UK (+9.3%), Italy (+4.2%) and Germany (+2.9%), while France remained stable (+0.3%).

The data confirms that for Western Europe published by LMC Automotive earlier this month.

In December, EU car registrations grew 4.7% year-on-year to 951,329 units.

Analysts remain cautious about prospects for the European car market in 2015, though it is widely expected to continue to grow. LMC forecasts that growth will slow to 2.5% amid fragile economic growth for the eurozone and worries over the effects of falling prices on consumer spending patterns.

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LMC analyst Jonathon Poskitt told just-auto that the car market would be adversely impacted if price deflation took hold this year. “The evidence is that a sustained decline in prices leads to a general decline in economic activity. If GDP contracts, then household incomes will fall, confidence will be dented further and car markets will inevitably fall. The fragile recovery that we have seen thus far in Europe would effectively be undone. Deflation is certainly a risk to the outlook if it really takes hold. We will have to see if it becomes a factor.”

Peter Fuss, Senior Advisory Partner, EY’s Global Automotive Center, also sees the Europeean car market as in a fragile state.

“As we move into 2015, the European car market remains fragile, as chances of economic recovery remain bleak,” he said.

“The ECB is planning to introduce several measures to stimulate the economy and overcome the stagnation. As a result, we expect car sales to witness a dampened growth of 3%-4% in 2015. The compact SUV segment is expected to continue its growth story, at least over the medium term, owing to new model launches and increasing consumer preference.

“If the ECB’s measures come through, the European car market is expected to continue on its path of revival. However, the European car market is unlikely to witness accelerated growth, unless unemployment is brought down and consumer confidence is revived.”

During 2014, the figures Europe (EU28+EFTA) show market leading VW Group increased 7% to 3.31m units boosted by by Skoda and SEAT. Number two group was PSA Peugeot-Citroën, with a 3.7% gain to 1.39m units, supported by new model launches at both its Peugeot and Citroën brands. The Renault Group’s improvement was even bigger as it enjoyed a boost from Dacia which recorded an increase of 23.3% in sales last year.

General Motors’ European sales were dragged down by the withdrawal of its Chevrolet brand.

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