European new-car sales surged the most in almost four years as price cuts by producers such as Renault and Ford helped generate a recovery that industry executives say will last in 2014.

Deliveries last month jumped 13 per cent to 948,090 vehicles from 839,027 a year earlier, the Brussels-based European Automobile Manufacturers Association, or ACEA, said today.

That pared the decline for the year to 1.8 per cent for a total of 12.3 million autos, the lowest number since 1995.

Carmakers are predicting a gradual increase in European demand this year after a sovereign-debt crisis and recessions led to a six-year contraction in deliveries through 2013.

Consumers replacing old cars may account for some of the recovery, though gains are also being fed by continued incentives from automakers and a government programme in Spain to encourage trade-ins of old vehicles for scrapping.

"There's a good case to say that the car market is improving on an underlying basis," Sascha Gommel, an analyst at Commerzbank AG in Frankfurt, said.

"The fleet aged a lot in Europe over the last years because demand was so low, and you still have very low interest rates."

Confidence climbs

The sales increase in December was the steepest since a 13 per cent jump in January 2010. It marked the fourth successive month of growth, the longest stretch since the June 2009 through March 2010 period.

Among countries using the euro, economic confidence rose in December to a 2 1/2-year high after an 18-month recession ended in the second quarter.

Inflation in the UK, which isn’t part of the euro zone, slowed in December to 2 per cent from 2.1 per cent in November, which may allow the Bank of England to maintain interest rates at a record low.

Registrations rose in Europe’s five biggest auto markets, with jumps of 24 per cent in the UK and 18 pe rcent in Spain, where the government revived a cash-for-clunkers incentive programme in October.

Growth in another 11 countries exceeded 10 per cent, including a doubling of demand in the Netherlands that was propelled by buyers seeking to avoid a government surcharge taking effect in January.

Bloomberg