Registrations fell to 83,340 cars, with Renault's (>> RENAULT) 10.7 percent decline leading the drop. PSA Peugeot Citroen (>> PEUGEOT) sales fell in line with the market.

France is lagging a fragile recovery in Europe as a whole, where car sales were up 6.2 percent in the first half of the year. European sales data for July and August is due to be published on Sept. 17.

"Consumers are holding back before replacing their cars," said Flavien Neuvy, head of auto-market forecasting at Cetelem, a BNP Paribas (>> BNP PARIBAS) sales financing division.

"The morose economic context is continuing to weigh, and while August is not very representative we're still 20 percent below pre-crisis levels."

European leader Volkswagen (>> Volkswagen AG) bucked the French decline with an 11 percent sales gain led by its no-frills Skoda brand, up 25 percent - paring the group's loss of market share this year.

French registrations for the year so far were up 1.6 percent, the CCFA said. When adjusted for the loss of one selling day compared with August 2013, sales last month rose 1.8 percent.

Delivery van sales also fell 3.8 percent in August, for a 3.2 decline in light vehicle registrations overall.

(Reporting by Laurence Frost and Gilles Guillaume; Editing by James Regan)

Stocks treated in this article : BNP PARIBAS, PEUGEOT, RENAULT, Volkswagen AG