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Cars are parked at a dealer in Berlin’s Weissensee district March 26, 2013. New car sales have dropped 10 per cent in 2013 so far this year in Germany, nearly 30 per cent in the Netherlands and 14.8 per cent in Sweden.TOBIAS SCHWARZ/Reuters

Snow is piled high on the cars in a deserted dealership in Berlin, and it is not just the stubborn wintry weather that is gnawing at salesman Mustafa Kosak, shivering at his desk in a portable office.

"Sales were drastically down in January, February; sometimes we are happy just to cover our overheads," said Mr. Kosak, 38, wrapped up in a big overcoat.

The chill in cars sales has spread from southern Europe, where the worst of the euro zone debt crisis is crippling economies, to the north, including the region's biggest car market, Germany.

New car sales have dropped 10 per cent in 2013 so far this year in Germany, nearly 30 per cent in the Netherlands and 14.8 per cent in Sweden. The only major northern European market that offered a glimmer of hope was Britain, where sales rose last year to their highest since 2008 and jumped 7.9 per cent this February alone.

New car sales in Europe dropped to a 17-year low in 2012 as disposable incomes, particularly in the south, were squeezed by rising prices, subdued wages and government austerity measures.

The market in northern Europe, where economic performance has been stronger, had held up better. The German economy is expected to grow this quarter, while wages are rising, and unemployment is near its lowest level since reunification more than two decades ago.

But as the euro zone crisis drags on, consumers in the north are growing cautious about making big purchases.

Car sales had already slipped a little last year, even as private consumption rose in Germany and the Netherlands.

"The problem is the German mentality; we want security, so if we're concerned something bad might be around the corner, we'd prefer to be cautious and save up rather than spend," said Christian Giebler, a 31-year-old salesman at a Peugeot showroom in Berlin, who this year has sold just half the number of cars he did during the same period last year.

"At the end of the day, our caution just leaves the economy kaput," he said. Peugeot new car sales in Germany fell 35.1 per cent in February, and the dealership was empty.

Premium brands Mercedes, Porsche and BMW, whose sales rose 4.9 per cent in the first two months of the year, are faring better in Germany than volume producers such as Ford Motor Co., Volkswagen AG and the French makers.

Tino Richard, who has managed a used car dealership in Berlin for 10 years, said he was only selling cars at prices up to €15,000 ($19,285 U.S.), "a sum that customers can still keep track of."

"Given the crisis, they are simply not taking any risks, and certainly don't want to take on debt," he said.

He noted nearly 40 per cent of his business came from exports three years ago, including to southern Europe, but that had shrivelled to 10 per cent.

Bitterly cold weather since the start of 2013 has done nothing to lift the consumer mood. Dealers said buyers would arrange a test drive but then cancel due to the snowfall.

Per Avander, chief executive of Bilia AB, the biggest car retail group in the Nordic region, active in Sweden, Norway and Denmark, said a greater share of sales was nowadays coming from corporate rather than private clients.

The market has typically been split 50-50 between private and corporate customers, but in 2012 the market swung to about two-thirds corporate.

He expected some growth in the overall car market this year in Norway, flat sales in Sweden and the weakest figures from Denmark. All these economies are expected to grow moderately this year.

Demand in northern Europe is still strong relative to southern Europe, where it has collapsed.

"The market in Germany had almost moved back to pre-crisis levels last year, whereas in Spain it is less than half that, and in Italy, sales fell away drastically to half previous levels," said Jonathon Poskitt at LMC Automotive market forecasters.

"We are forecasting the German market down 2 to 3 per cent for the full year – heavily down for the first couple of months but less so thereafter because last year's second half was weak."

But some northern European car markets are in rapid decline. The outlook is particularly grim in the Netherlands, where the economy, unlike Germany's, is set to shrink in 2013.

Dutch unemployment has risen to an 18-year high, while consumers' willingness to buy products reached the lowest point in February since consumer confidence data was launched in 1986.

With a 14.8-per-cent drop in 2012, the sale of cars, motorcycles, mopeds and bikes to consumers in the Netherlands, the euro zone's fifth largest car market, fell at the fastest pace year-on-year of all product categories, data from the Dutch statistics office CBS showed last month.

The decline compared with a 0.8-per-cent overall rise in consumer spending.

"It's the worst it's been since the 1980s," said Wimbart De Buijzer, who runs a dealership in Amsterdam's young, trendy Old West neighbourhood. Extra repair work was the only compensation.

"People are keeping their cars going longer, spending money on repair work rather than buying new vehicles."

Mass-market manufacturers lost an estimated $7-billion in Europe in 2012, Fiat chief executive Sergio Marchionne said at the Geneva car show this month.

Some car makers are cutting back European production capacity to stem the losses. Ford for example is closing three plants, including its Genk factory in Belgium.

Weak figures in Europe contrast with markets farther afield. The U.S. market has bounced back in recent months amid signs of a brightening economy, with car sales up nearly 4 per cent in February, and Asian markets have generally remained robust.

Dealers said it did not help that Europe was a mature market, where younger consumers were ever more environmentally aware and opting for car-sharing and public transport.

In Germany, more are turning to used cars. Data from the Federal Motor Transport Authority (KBA) shows sales of used cars up 2 per cent in January and February.

"I bought a used car rather than a new car in order to avoid the huge value loss that you suffer as buyer of a new car in the first six months," said one 37-yeaold businessman from Munich, who had just taken ownership of a three-year old BMW 330d Touring.

Last year, too, when revenue from new cars sales was down 8 per cent, used car sales rose 5.8 per cent and servicing revenues were up 3.2 per cent, according to the German Federation for Motor Trades and Repairs (ZDK).

A controversial sales practice called "self-registration" – selling to car makers and dealers – which last year inflated new-car sales statistics – has also fuelled the sales of used cars at the start of 2013.

Nearly three in every 10 new vehicles in Germany last year were self-registered, and these now have to be shifted at discounts that can reach as low as a third of the list price.

"Last year we saw very high discounts and self-registrations such that the sales figures were artificially very high, and it was clear that couldn't go on," says Peter Fuss, an analyst at Ernst & Young's Global Automotive Center.

"At some point, the air has to be let out of the market," he said. Self-registrations were down 1.8 per cent in Germany in the first two months of 2013, according to the ZDK.

Mr. Fuss said he nonetheless expected the auto market to remain stable overall this year while there was no recession in Germany.

The chief executive of German luxury car maker Daimler told a news conference earlier this month that he expected "an improvement in the second half of the year."

Rolf Buerkl of GfK market research group also said all underlying economic trends suggested car sales in Germany should "overcome this weak phase in the near future."

One German car dealer, who declined to be named for fear of alarming customers of his 20-year old dealership, said that in the meantime he was worried about his livelihood.

"We can only hope that when the good weather returns with spring, and as wages rise, people will be in a better mood to buy cars again," said the 46-year old.

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