The drop was led by Ford, General Motors and Fiat as mid-market brands bore the brunt of the slump in markets including Italy, France and Germany.
The region recorded 722,483 registrations last month, the Association of European Automakers said, compared with 789,458 a year earlier.
Sales for the first eight months fell 6.6 per cent to 8.59m vehicles.
Ford had the worst August among major automakers, with sales plunging 29 per cent year-on-year. European registrations always hit a seasonal low in the biggest summer vacation month.
The US carmaker is considering factory cuts even as it prepares to roll out new models to halt mounting losses and falling market share.
General Motors, which is also preparing job cuts and an eventual factory closure in talks with unions at its Opel brand, saw total registrations drop 18 per cent last month, matched by the sales decline at Italy’s Fiat.
With the exception of Spain, austerity-strapped markets worst hit by the debt crisis continued to suffer, with registrations contracting 20 per cent in Italy and 11 per cent in France, while British sales were little changed.
Spanish sales rose 3.4 per cent as customers rushed to complete purchases ahead of a 1 September sales tax increase – but have since plunged 28 per cent, according to car retailers’ association Ganvam.