"This result points out a slow start to the year in an economic context that remains sluggish," the Brussels-based ACEA said.

Registrations in the broader group of countries slipped 2.3 percent in the first two months of the year. The group noted February had the same number of working days in both years in almost every country.

Weak sales are making life hard for carmakers already battling a strong euro, high raw materials prices and excess capacity that is driving prices lower in a buyers' market.

Carmakers are hoping that a raft of new models will boost sales as the year goes on, but Dresdner Kleinwort Wasserstein analyst Arndt Ellinghorst was not so sure.

"I think we are learning that it is not going to get better. It is a different attitude in western Europe for consumers buying cars. If everyone is concerned about his pension, one area where you can save money the easiest is on cars," he said.

In addition, sales to retail customers are declining while lower-margin sales to commercial clients are on the rise, especially in Germany, Europe's biggest car market, he added.

That kind of environment helps the leanest manufacturers.

"I wouldn't bet on any support from the volume side, neither would I expect any support from pricing. This business is moving towards cost advantages. Those companies with the most focused business models have a clear competitive advantage," Ellinghorst said.

BMW UP, FIAT DOWN

German premium carmaker BMW had another fine month, boosting European registrations 23.9 percent year on year in February, while registrations for archrival DaimlerChrysler dropped 9.6 percent.

BMW is milking the biggest new product offensive in its history, including its well-received 1-Series compact. It is counting on another boost from the launch of its new 3-Series model, which hit dealer showrooms this month.

DaimlerChrysler has blamed weak sales of its flagship Mercedes-Benz cars on problems with faulty diesel pumps and impending model changeovers, which encourages customers to postpone buying.

Group registrations for struggling Italian carmaker Fiat decreased 16.7 percent, led lower by its Fiat brand cars. Renault's sales retreated 12.8 percent compared to a robust February last year.

South Korea's Kia Motors again led Asian manufacturers, with registrations up 69.1 percent last month. Its share of the European market rose to 1.4 percent from 0.8 percent a year earlier.

Other Asian carmakers turned in mixed showings.

Toyota's registrations, including its luxury brand Lexus, fell 9.6 percent and blunted its steady advance in Europe, reducing the world's number two carmaker's market share to 5.4 percent.

Nissan and Mazda sales also fell, but Mitsubishi, Honda and Suzuki grabbed more market share.