The decline in Europe's car market accelerated in December, led by a slump at regional No.2 automaker PSA Peugeot Citroen
, as increasingly worried consumers held back from major purchases, industry figures showed on Tuesday.

Car registrations tumbled 5.8 percent last month following declines of 1.4 percent in September and 3 percent in November, the Brussels-based Association of European Carmakers said. Registrations ended the year 1.4 percent lower at 13.6 million.

Consumers are loath to engage in big-ticket expenditure as purchasing power comes under pressure, said Alexander Law, head of economics consulting firm Xerfi Global in Paris.

The downgrade of nine European nations' debt by Standard & Poor's last week will lead to higher interest rates on consumer credit including car loans, the consulting firm predicts.

That will weigh heavily on the auto market, Law said. This year is going to be very tough for Europe's auto market.

December's auto market slide was accompanied by worsening euro zone consumer confidence, according to European Commission data.

In Germany, the region's biggest economy and its only major auto market to post growth last month, ZEW index data due later on Monday is expected to show that morale has fallen further this month.

Paris-based PSA's sales dropped 19 percent to 112,802 cars, weighed down by a 23 percent plunge for the Peugeot brand, while Citroen declined a more modest 13 percent.

PSA lost one percentage point of market share as its stock underperformed all 14 other members of the STOXX Europe 600 autos & parts index <.SXAP>, with a 56 percent plunge over the past 12 months. The company appointed a new strategy director on January 10, a week after the surprise departure of second-ranking executive Jean-Marc Gales.

Volkswagen , the region's biggest automaker, bucked the market decline to consolidate its recent gains, with sales advancing 9 percent in December for a 7.8 percent advance in 2011. VW's full-year market share rose by 2 percentage points to 23.3 percent.

Sales by Renault , General Motors and Fiat fell 14 percent, 15 percent and 16 percent respectively on a shift away from smaller cars, collapsing southern European demand and the effects of ageing model line-ups.

European carmakers are expanding overseas to reduce dependence on their stagnating home markets.

Renault increased the share of deliveries outside Europe to 43 percent in 2011 from 37 percent a year earlier, the company said on Tuesday.

Global sales increased 3.6 percent to 2.72 million vehicles last year and will grow another 3-4 percent in 2012, Renault sales chief Jerome Stoll said, adding that conditions should improve towards the end of the year after a tough first half.

At the Detroit auto show last week, industry executives predicted a steady recovery in U.S. car demand but were far less bullish about the European market, seen contracting about 5 percent for a fifth straight annual decline.

What we're seeing is a recession coming in Europe, Renault-Nissan Chief Executive Carlos Ghosn said on January 10.

Premium car makers have so far largely escaped the European sales slump. Daimler's Mercedes Benz posted a 10 percent December sales gain to keep the group's 2011 sales in positive territory.

BMW, the world's biggest luxury car maker, saw registrations drop 3 percent last month as some buyers held back for an imminent update to the core 3-Series model. Full-year sales rose 7.6 percent.

(Additional reporting by Gilles Guillaume; Editing by James Regan and Hans-Juergen Peters)