Fresh models and dealer discounts helped new car sales in Europe to a record for June.

The gain helped offset losses seen in the 23 European Union countries plus the EFTA countries of Norway, Switzerland and Iceland in the first five months of the year.

Registrations rose by 4.5 per cent to 1.55 million units and were buoyed by another strong performance in Germany, the biggest single European market, which is now recovering from the doldrums.

Within the core 15 EU countries the performance was even stronger.

Sales there rose by 4.7 per cent to 1.435 million.

Sales of new cars in Italy leaped 18 per cent as the market snapped back from a transport strike that disrupted May sales in Europe's third-biggest car market.

Four out of the five main markets recorded growth in June, according to the Brussels-based motor trade body Acea.

The exception was Britain, where sales fell by 4.8 per cent last month.

German luxury car maker BMW and South Korea's Kia Motors strongly outpaced the market again, while Volkswagen, Europe's biggest automaker, stormed back with brisk sales that lifted its market share to 19 per cent.

Italy's struggling Fiat, which had been hit especially hard by the strike of car transport truckers, saw registrations fall by four per cent despite the surging Italian market. Among British manufacturers, BMW's Mini was the only the brand to gain ground in June.

Sales of the Oxford-built car rose by 22.7 per cent to 12,889 and were 7.8 per cent up at 67,648 over the first six months of the year.

Land Rover and Jaguar, both of which are part of Ford's Premier Automotive Group, lost ground.

At 5,233, Jaguar was 13 per cent down on the month and 23 per cent on the year to date at 25,468.

The company, which is switching the focus of its sales and marketing drive to its lower volume, higher margin, top of the range models, expects to start making gains later this when its new XJ

2.7D enters the booming market for diesel powered luxury executive cars.

Jaguar is also hoping to pick sales from the new long wheelbase variant of the XJ although this is aimed primarily at the US market.

Land Rover, which is waiting to assess the impact on the new Range Rover Sport on the luxury end of the 4x4 market, was seven per cent down at 6,487 last month and five per cent down on the year to date at 38,650.

MG Rover, which is slowly disappearing from the sales tables after production ended at Longbridge in April, was down 85 per cent with sales of just 1,502 in June and was 48 per cent down over the first six month at 34,005.

Peugeot, which builds the top ten selling 206 at Ryton near Coventry, was four cent down in June and 4.6 adrift over the first half with sales of 110 , 597 and 599 , 418 respectively.

Bank Sal Oppenheim analyst Michael Raab attributed the sales rise to new models, such as the Mercedes B-class small estate car and the BMW 3-Series saloon and the end of the strike in Italy.

Incentives helped fuel sales but hurt manufacturers' margins.

"The pricing environment, in particular in the mass market, is going to stay highly competitive," he said.

"Selling vehicles without significant incentives in that part of the market has got to be very difficult if not impossible." .

Slack sales so far this year have put the pinch on carmakers already squeezed by a strong euro, high raw materials prices and excess capacity, but the dollar's climb against the euro this year and softer steel prices are offering some relief.

The automotive industry generates about three per cent of western Europe's economic output and accounts for 7.5 per cent of its manufacturing base, Acea said.

Volkswagen, gripped in a bribery scandal that has hurt its image this month, managed to improve June registrations by 8.1 per cent, aided by strong showings at its Audi luxury arm, Czech-based Skoda cars and its core VW brand.

Registrations at the BMW group jumped by nearly 22 per cent giving it a market share of 5.2 in Europe, the same as Toyota, and putting it ahead of Mercedes as the world's biggest maker of luxury cars.

Kia once again led the growth league as registrations leaped 51.6 per cent last month.