Although new car registrations rose by 7.3% in August across Europe – an increase of 53,000 units compared to August 2010 – Autofacts, PwC’s automotive forecasting and research unit, says that the increase is largely due to comparison with a weak August in 2010 in the main markets and masks a fragile outlook across European countries.

Michael Gartside, lead European analyst at Autofacts, said: ‘With the escalation of the debt crisis, a weakening economic outlook and employment prospects as they are, many European countries could be in for a difficult few months.’

Across Europe, Germany remains one of the few bright spots, with new car registrations surging by 18.3% in August. The market remains on track for 9.7% growth this year to 3.2 million units (an increase of 280k units), with fleet demand driving this increase.

In the UK data from the Society of Motor Manufacturers (SMMT) shows registrations rose in August by 7.3% to 59,346 units, which is the first increase since June 2010. For the year to date they have fallen by 6.1% to 1.22 million units and for the full year Autofacts forecasts a 6.4% fall to 1.9 million units. However, with the economy stagnating and weak consumer confidence, the risks remain weighted to the downside.

Elsewhere in Europe, French passenger car sales increased by 3.2% in August, but a weak year-end is forecast owing to comparison with a scrappage scheme inflated 2010 year end. Italy is also becoming one of the main concerns within Europe. The recently introduced austerity measures will have compounded the already weak demand outlook and pose a downside risk to the full year forecast of 1.75 million units, the lowest market level since 1993.