PSA Peugeot Citroen, Fiat SpA and General Motors Co. led the biggest decline in European car sales in five months as the region’s economy slipped closer toward a recession.

Registrations in November dropped 3 percent to 1.07 million vehicles from 1.10 million a year earlier, the biggest decline since June, the Brussels-based European Automobile Manufacturers Association, or ACEA, said Friday in a statement. Eleven-month sales declined 1.1 percent to 12.6 million registrations.

“This minus figure will only get worse in the coming months,” said Hans-Peter Wodniok, a Kronberg, Germany-based analyst at Fairesearch GmbH who recommends buying Peugeot and selling Fiat. Unless carmakers stage production halts in December, “the inventories will be very full, which wouldn’t be good going into a bad 2012.”

Four of the region’s five biggest markets contracted, with France and Italy leading declines at 7.7 percent and 9.2 percent respectively. The European Central Bank cut its 2012 economic- growth forecast for euro countries on Dec. 8 to a range of minus 0.4 percent to plus 1 percent, from plus 0.4 percent to 2.2 percent previously. European manufacturing contracted in November and economic confidence fell.

Peugeot and Renault SA, France’s largest carmakers, are cutting production capacity to reduce inventories. Turin, Italy- based Fiat is working to stem an increase in debt as its domestic car market approaches a 30-year low.

The ACEA compiles figures from European Union member countries plus Switzerland, Norway and Iceland. Western European car sales, which don’t include figures from the nations that have joined the EU since 2004, fell 2.7 percent to 1 million vehicles.

European sales at Paris-based Peugeot, the region’s second- biggest carmaker, dropped 13 percent, while registrations at Fiat declined 12 percent. Detroit-based GM, whose main brands in Europe are Opel and Vauxhall, posted an 11 percent drop. The Detroit-based carmaker said last month that its global sales would be similar to last year’s, with weakness in Europe dragging down the company’s earnings.

Sales in the U.K. and Spain declined, tumbling 4.2 percent and 6.4 percent respectively. Registrations in Germany, Europe’s largest car market with sales that account for almost one in four vehicles delivered in the region, grew 2.6 percent, holding back the gain this year in the country to 9.1 percent.

The end of the property and construction boom, fueled by a speculative bubble and low interest rates during the previous decade, has caused Spain’s unemployment rate to more than double to 22.8 percent. The economy, which stagnated in the third quarter, may contract in the final three months.

Spain’s car market, which peaked in 2007 peak at 1.61 million vehicles, probably won’t top that figure in this decade, according to Jonathon Poskitt, an Oxford, England-based analyst at J.D. Power & Associates.

J.D. Power estimates that industrywide car sales in western Europe will fall to 12.6 million vehicles in 2012 from the 12.8 million deliveries anticipated this year and the 13 million posted in 2010.

Daimler AG, whose Mercedes-Benz division is the world’s third-biggest luxury-vehicle maker after Bayerische Motoren Werke AG and Volkswagen AG’s Audi division, posted a 6.8 percent European sales drop. Sales at Renault, France’s second-biggest carmaker, fell 1 percent, while those at Ford Motor Co. dropped 5.5 percent.

European sales at Volkswagen, the region’s biggest carmaker, rose 5.8 percent. Wolfsburg, Germany-based VW, which also owns the Skoda and Seat brands, has introduced a new version of the Passat mid-sized car and a revamped Audi A6 sedan in the past year.

BMW increased its European sales 1.1 percent, contributing to the company’s best-ever November global sales total, according to the BMW website. The Munich-based carmaker redesigned its mid-size 5-Series line last year, and sales of the model increased 52 percent globally in November. 

(Bloomberg)