German Auto Sales Drop 17% in March image

March auto sales in Germany dropped 17% to 281,184 units, as the crisis in Europe made customers avoid big purchases.

The German Federal Motor Vehicle Office said that the drop was the biggest since October 2010, while sales during the first quarter fell 13% to 673,957 units. The unemployment level in Germany continued to increase and therefore consumer confidence dropped, also due to concerns related to the bank bailout in Cyprus which means that Europe’s recovery will falter.

“Worries in the debt-ridden southern European countries are spreading to the German market,” said Christian Ludwig, a Dusseldorf, Germany-based analyst with Bankhaus Lampe. “The cold weather in March with ice and snow and the Easter holidays were one-time effects that didn’t help.”

PSA Peugeot Citroen reported the steepest decline in Germany, with a drop of 41% at Peugeot and 36% at Citroen. VW, the biggest automaker in Europe, dropped 21% and Audi fell 9.7%. Seat and Skoda brands were the only ones to post gains. Plants in Germany reduced production in March by 13% to 474,900 vehicles.

“I expect the market to stabilize in the second quarter,” Matthias Wissmann, president of the German carmakers association, or VDA, said in a separate statement. “The economic outlook for Germany is still robust.”