The Society of Motor ManufacÂturers and Traders said the UK's domestic industry was still far from its pre-boom heights.
This is the latest in the continent's economic struggles.
New car registrations in the European Union fell by 10.8% in September compared with the same month last year, providing a darkening consumer backdrop to mounting speculation that Spain is close to seeking a formal bailout. New registrations in the EU were just under 1.1-million compared with 1.23-million in the same period last year.
Mass-market brands bore the brunt, with Renault falling by more than 30% and Fiat tumbling by 15%, but premium vehicles were also affected. According to the figures published by the European Automobile Manufacturers' Association, Jaguar sales in the EU fell by 10% year on year and Lexus and Mini declined by 13%. Mercedes declined by 6.4%, although other German premium brands fared better – BMW rose by 10.5% and Audi grew by 1.4%.
The Society of Motor Manufacturers and Traders said the UK's domestic industry was still far from its pre-boom heights and would not be immune from the eurozone's troubles. Paul Everitt, the society's chief executive, said British consumers had benefited from a weak pound and European manufacturers targeting the more vibrant UK market with aggressive pricing. But that had a negative effect on car retailers and manufacturers in the UK, he said.
"It means that margins are very thin for vehicle manufacturers and their retail networks. It is not a situation that can continue much longer. It's a great time to buy a car because there is a lot of good quality product being offered at exceptional values, but it is a tough environment to work in," Everitt said.
The figures come as manufacturers grapple with a capacity glut that has saddled the likes of Fiat, Vauxhall and Peugeot with underused plants.
Mark Fulthorpe, analyst at IHS Automotive, said this week's numbers made it even more likely that there would be further factory closures. He added that manufacturers were beginning to cut back "because the opportunity of a better tomorrow in terms of Western European demand is just not evident". – © Guardian News & Media 2012
Dan Milmo is the Guardian's industrial editor