European passenger car sales got off to a strong start in January, according to European automobile manufacturers association ACEA.

After several months of stagnation at the end of 2005, 1,232,701 cars were sold in the European Union last month, up 3% year on year.

Add in the three EFTA countries of Iceland, Norway and Switzerland and sales rise to 1,259,267 units, an increase of 2.6%.

In the major markets, strong growth was seen in Germany (+10.8%), and Italy (+10.7%). In contrast, sales fell dramatically in the United Kingdom (-13.3%), which Reuters attributed to the ending of a 3% tax break that had boosted demand at the end of 2005.

Demand in the new EU states fell 4.9%, because of a decline in sales in the largest market, Poland (-16.4%). This was despite 12% growth in the second largest market, Hungary, and strong double digit growth in the Baltic states (more than 50% in both Latvia and Lithuania).

Volkswagen was the clear winner in January, with group sales up 19.4% to 247,514 units, equivalent to market share of 19.7% or almost a fifth. All group brands recorded growth, but the Volkswagen brand, benefiting from strong sales of the new Passat and Fox, increased sales by over 25%, to 132,457 units, giving it a market share of 10.5%. Seat increased sales by 22%, Audi by 11% and Skoda by 9%.

Fiat was the other major brand to benefit in January with sales up 17.9% to 105,303 units, for a market share of 8.4%, boosting the Italian market. Fiat brand sales rose 23.2% with deliveries of the new Punto now well under way.

The big losers were Renault (-17%), DaimlerChrysler (-8.3%) and Toyota (-8.2%).