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Car slump in France, Spain and Italy spells gloomy 2013

By Laurence Frost

PARIS (Reuters) - Car sales in France, Spain and Italy in 2012 fell to the lowest levels in years, with December registration data underscoring the challenges facing the broader European economy.

Automakers are facing a sustained slump in the European car market as the euro zone debt crisis and government austerity measures sap consumer demand.

"The new car market continues to decline - a trait which we anticipate will continue through the course of 2013," Credit Suisse analyst David Arnold said on Wednesday, adding European auto sales were unlikely to see growth in 2013.

Europe's stagnating auto market will have knock-on effects for other economic players including steel producers, Nomura analyst Matthew Kates said in a note, citing forecasts by consulting firm AutoAnalysis.

Italy's car sales, down 22.5 percent in December, slumped 19.9 percent for the full year to 1.4 million units, their lowest levels since 1979.

"The car market is suffering from an overdose of taxes aimed at hitting, if not criminalizing, the acquisition, ownership and use of autos," said Filippo Pavan Bernacchi, the president of Italy's car dealers' trade group Federauto.

He said he expected Italian car sales in 2013 to be close to 1.33 million units.

French car registrations fell 15 percent in December, leaving the full year down 14 percent to 1.90 million vehicles - the lowest since 1997, French industry group CCFA said.

Spain's monthly sales shrank 23 percent, after a 20 percent fall in November. Its full-year total of 699,589 cars, down 13 percent, was the lowest since industry association Anfac began keeping records in 1989.

Germany will report December data on Thursday.

Ford led December's declines among mass-market brands with sales down 40 percent in France, 31 percent in Spain and 33 percent in Italy. Opel - the European unit of General Motors - posted declines of 16 percent, 17 percent and 47 percent, respectively.

Volkswagen , Europe's biggest automaker, saw sales at its core brand slump 25 percent in France, 15 percent in Spain and 36 percent in Italy.

PSA Peugeot Citroen fell broadly in line with both markets, while Fiat brand sales dropped 11 percent in France, 28 percent in Spain and 20.5 percent in Italy.

Renault-brand registrations dropped 20 percent in Spain and 32 percent in France. Its home market is likely to shrink 2-5 percent this year, Renault France marketing director Nicolas Monnot said.

"This is completely coherent with the various macroeconomic forecasts available."

In a note on Italian data, auto think-tank Promotor said Italy's full-year fall in car sales was particularly worrying at a time when the global auto market was growing.

"The auto crisis does in fact involve only the euro area and is a direct consequence of the depressive effect of austerity policies on the real economy," it said.

The chance of a recovery in the euro zone economy has faded further into 2013 after the recession deepened in the final months of last year, a Reuters poll found last month.

KNOCK-ON EFFECTS

Falling business investment and persistently weak consumer sentiment are challenging French President Francois Hollande's efforts to stem rising unemployment and keep government spending within its 2013 deficit target.

Spain's year-old recession was expected to continue well into 2013, weighed down by battered economic sentiment and 25 percent unemployment, a record high. Manufacturing activity shrank for a 20th straight month in December.

Italy was seen recording a 0.2 percent economic contraction this year, according to government figures. The International Monetary Fund predicted a 0.7 percent decline.

With fast-growing markets such as China and Russia increasingly meeting their own demand for steel, European producers are more than ever at the mercy of domestic industry.

"It is difficult to get bullish on the outlook for European auto demand in the near term, with obvious implications for European steel demand," Kates at Nomura said.

German auto demand, which had long resisted the slump spreading north, turned negative in the second half to post a 1.7 percent drop for January through November.

In another sign of contagion, French delivery van sales contracted sharply in December, plunging 22 percent for their biggest monthly decline since the crisis of 2008, CCFA spokesman Francois Roudier said.

"We have already been seeing individual consumers holding back (on car purchases), particularly in the mass market," Roudier said. "Now company fleet sales are slowing down as well."

(Additional reporting by Paul Day, Gilles Guillaume, Gus Trompiz and Stephen Jewkes; Editing by Dan Lalor, James Regan and Hans-Juergen Peters)

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