Spain saw sales dip 24 percent in July compared to the same month a year earlier. In Italy, sales fell 26 percent. In France, sales of new passenger cars were down 12.9 percent for the month.

New car sales in Spain, France and Italy fell dramatically in July as government scrapping schemes have begun being phased out.

In Spain, sales were down to 82,167 units in July, a 24 percent drop compared to July of 2009. Spain introduced a VAT tax increase on July 1. ANFAC, the automakers' association in Spain, warned that sales may drop up to 30 percent for the second half of the year as government subsidies for new car purchases are wound down.

Sales of new passenger cars in France fell by 12.9 percent in July to 169,804 units, compared to a year earlier. In Italy, sales were down nearly 26 percent to a total of 152,752 units. For domestic automaker Fiat it was worse, as the Italian brand saw a 35.8 percent drop for July in year-on-year sales. That meant Fiat's market share dipped below its target of 30 percent for Italy for the first time in almost 5 years.

Sales for the region are expected to stay below 2009 levels for the remainder of the year, as European governments introduce austerity measures to improve their financial health, discouraging consumers from making big-ticket purchases such as cars.

Gallery: France, Italy and Spain car sales drop up to 26 percent