Audi was the best-performing auto maker in Europe last month, posting a 48% sales increase.

Photo: yves herman/Reuters

BERLIN—New-car sales in Europe rose last month for the first time this year, a sign that the global auto industry is slowly beginning to pull out of its worst slump in decades.

Yet even as consumers return to dealerships in the U.S., China and Europe, a full recovery from the sharp decline triggered by lockdowns earlier this year is likely to take years, analysts said.

China, the world’s biggest car market by sales, was the first to succumb to the Covid-19 pandemic and the first to see its auto industry return to growth this summer. The U.S. quickly followed.

Now, Europe appears to be turning the corner, too.

The European Automotive Manufacturers’ Association said Friday that new-car registrations, a proxy for sales, totaled 1.3 million vehicles, an increase of 1.1% from the previous year. That compares with an increase of 6.2% for the month in the U.S.

In September, sales at Volkswagen AG, VOW 2.15% which includes Audi, Porsche, Seat and Skoda, rose 14%, making it the fastest-growing car maker in the region. Audi was the best-performing auto maker in Europe last month, posting a 48% sales increase. Fiat Chrysler Automobiles NV’s European sales rose 14%, and those of Toyota Motor Corp. increased nearly 9%.

Over the entire quarter, European new-car sales were still down about 6% in the three months to Sept. 30, according to industry data. That compares with a decline of 9.6% in the U.S. and an increase of 7.9% in China, the first time new car sales in China grew on a quarterly basis in two years.

Auto makers such as General Motors Co. , Ford Motor Co. , Volkswagen and Daimler AG have all benefited from demand in China, which has helped offset swooning home markets.

Daimler reported on Friday that earnings before interest and tax in the three months to Sept. 30 rose to €3.07 billion—or $3.6 billion—beating market estimates of around €2 billion, after a loss of €1.7 billion in the second quarter. The company attributed the profit boost to improved markets and cost-cutting, saying it would adjust its outlook for the full year when it published final figures on Oct. 23.

Returning demand in Europe was uneven. A resurgence of Covid-19 infections in France and Spain appears to have stifled any rebound in those countries, while Germany and Italy, where infections remained subdued last month, posted strong growth in new-car sales.

The European manufacturer’s data show that several car makers, including some premium-car brands, continued to lose ground last month.

Toyota’s Japanese rivals Mitsubishi Corp. 8058 -1.66% and Mazda Motor Corp. 7261 -0.82% were the weakest performers in Europe in September, with sales falling 25% and 23%, respectively. European premium-car makers Jaguar Land Rover, BMW and Mercedes-Benz also suffered sharp sales declines.

The fragility of the recovery was highlighted by PSA Group, which includes the Peugeot and Citroën brands. For the past several years one of the fastest-growing auto makers in the world, PSA suffered a 14% fall in sales last month.

Pent-up demand in the wake of the lockdowns was one driver of global demand for new cars, analysts said. But some analysts saw a boost from pandemic-inspired changes in consumer habit: Commuters around the world who have relied on public transportation and car-sharing services are now buying cars to avoid crowds on their journeys.

“People’s lifestyles are changing, and individual mobility is more appreciated than ever before,” said Arndt Ellinghorst, an automotive analyst at Bernstein Research.

The unpredictability of the virus’s trajectory in the coming weeks and months has clouded any long-term optimism. GlobalData, a research group, expects global vehicle sales this year to fall 16% compared with 2019. It also predicts that global auto sales will rebound next year, but won’t return to pre-pandemic levels of demand until 2023, and even that scenario is fraught with risks.

“Demand and industry output is now in recovery phase, but the economic foundations for the global vehicle market are fundamentally damaged,” GlobalData automotive analyst Calum MacRae said in a statement.

Write to William Boston at [email protected]

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the October 17, 2020, print edition as ‘Europe’s Car Sales Signal A Rebound.’

This post first appeared on wsj.com

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