Employees of Fiat SpA work on an engine at  the company's factory near Naples, Italy. Alessia Pierdomenico / Bloomberg

Vehicle registrations in January fell 6.6 percent to 1 million vehicles, marking the fourth consecutive monthly decline, the Brussels-based European Automobile Manufacturers' Association said on Thursday in a statement.

Sales in France, the region's second-biggest market after Germany, plunged 21 percent, while deliveries in Italy, the third-largest market, slumped 17 percent. GDP in the 17-nation eurozone fell by 0.3 percent in the fourth quarter, the first drop since the second quarter of 2009.

"Carmakers too dependent on small cars and their national markets, as the French ones and Fiat, are suffering the most," said Ian Fletcher, a London-based analyst with IHS Automotive. "They are basically trying to keep their heads out of the water."

Peugeot, Europe's second-biggest carmaker after Volkswagen AG, plans to sell assets after its carmaking division missed a break-even target in 2011. The Paris-based carmaker's sales in Europe fell 15 percent to 124,240 vehicles.

The European car market may shrink 5 percent this year, Peugeot Chief Executive Officer Philippe Varin told journalists on Wednesday. That would mark the fifth consecutive annual sales drop for the region.

Fiat, whose mass-market brands lost about 500 million euros ($650 million) in the region last year, is looking for a partner in Europe to cut costs and share technology as it doesn't see a recovery in the market before 2014. Fiat's European sales dropped by 16 percent to 69,479 autos.

Fiat CEO Sergio Marchionne, who shut down a factory in Sicily at the end of last year, expects the Italian market to fall to the lowest since 1985 this year.

"We need to remove the fact that we've got the mass car market in Europe, which is economically unproductive and which, just in raw, pure economic analysis, does not deserve capital allocation of any kind," Marchionne said on Feb 1.

Renault's registrations dropped by 25 percent to 82,724 cars. The company reported on Thursday a decline in earnings before interest, taxes and one-time items to 1.09 billion euros from 1.1 billion euros a year earlier.

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