Europe’s troubled car market grew by 5 percent in July, only the second time this year the region has seen monthly growth, Germany’s auto industry association VDA said.

The rise supports hopes of a much-needed market stabilization in the second half of 2013, the VDA said.

“The positive July result … is a good start for the stabilization we expect in the second half,” VDA President Matthias Wissmann said in a statement.

Registrations of new cars in EU and EFTA markets rose to 1.02 million vehicles, according to data from the VDA published today.

“The emerging economic recovery in western Europe appears to be reflected in the development of car demand,” Wissmann said, adding that double-digit gains in austerity-hit Spain, Portugal and Greece were cause for confidence.

An extra working day in Germany, the region’s economic engine of growth, helped lift domestic sales slightly in July over the previous year’s month, but Frankfurt-based market researcher Dataforce calculates that volumes there still shrank 2 percent when adjusted for this calendar effect.

Europe’s car market is set to shrink for a fourth straight year, plumbing depths not seen in 20 years but second-quarter results have suggested some mass-market producers are closer to breaking even in Europe than previously thought.

Registrations in the first seven months of the year fell 5 percent to 7.46 million vehicles, but demand is expected to cease dropping materially as sales rates have started to recover.