Sharp rises in oil prices are blamed for slowing car sales in November.
Auto industry group ACEA said sales declined 1.1 percent in the region to 1.25 million compared with the same month in 2006.
"Private demand in most of the countries in western Europe has been dampened by consumer uncertainty fed by, among others, sharp rises in oil price, loss of purchasing power and regulatory changes," it said.
Inflation in the 13 nations that use the euro surged to the highest level in six years last month as the cost of oil and food items soared. Consumer confidence has been weakening in recent months after a brief growth spurt during which Europeans spent again after years of sluggish growth.
The car industry is also starting to see more taxes and other added costs as governments increase charges on road transport, which accounts for about a fifth of the EU's carbon dioxide emissions.
European leaders have pledged to cut the amount of greenhouse gas the region emits to try to tackle climate change. EU officials will next Wednesday set out plans to force carmakers to sell more lower emission vehicles.
Volkswagen AG, General Motors Corp. and Toyota Motor Corp. had the sharpest dip in sales among major automakers as demand in the biggest nations in the region slipped.
VW, which sells the most cars in Europe, was down 7.2 percent, shifting 266,826 vehicles. GM sales fell 5.2 percent, while Toyota was down 6.5 percent. Europe's No. 2 and No. 3 carmakers, Peugeot and Ford, were also down slightly.
Among smaller players, Renault SA was up 11.3 percent after a poor year, Fiat was up 2.6 percent and luxury carmaker BMW AG enjoyed a comfortable 16.6 percent rise.
In Germany, Europe's top car buyer, sales fell 12.9 percent from a bumper season last fall when people rushed into showrooms before a sales tax increase on Jan. 1. Spain was also down 5.9 percent.
France was up 7.2 percent as the economy recovers from a lackluster year in 2005. Britain only saw a modest increase of 2.2 percent, and Italy was up 1 percent. Eastern European nations reported better growth figures but sales are still well below richer western Europe.
The ACEA's sales figures count new car registrations from 23 EU nations - excluding the island nations of Cyprus and Malta - as well as Norway, Iceland and Switzerland.