Even with its European Car-of-the-Year, the Golf, Volkswagen took a sales hit last month.

With the continent’s economy still in free-fall, European car sales tumbled to their lowest level for May in two decades, according to the industry’s trade association.

Passenger car sales dropped 5.9% for the month compared to year-earlier levels.  At just 1.042 million vehicles, that’s the lowest recorded by the 27-country European Union since May 1993.  For the calendar-year-to-date, trade group ACEA reports EU sales are down 6.8%, to 5.07 million.

With rare exception – sales actually rose slightly in April – the European auto market has been sharply sliding for the last half-decade, a situation worsened by the debt crisis that has threatened to plunge Portugal and several other countries into default and even lead to the demise of the common currency, the Euro.

Even European powerhouse Germany has seen sales slide in recent months; they dipped a surprising 9.9% in May and worse than the 8% dip in Italy and 2.6% decline in Spain. Only France, among the major European markets, experienced a more severe 10.4% dip. Britain, meanwhile, was the only major market to post a sales increase, a rise of 11%.

Few observers expected 2013 to be a good year. “The only question is whether it will be bad or very bad,” Renault/Nissan CEO Carlos Ghosn said earlier this spring, adding that, “I don’t think anybody is forecasting a pick-up of the European market for the next three years.”

The May numbers leave industry leaders and analysts debating whether the situation is one of the half-full or half-empty glass.  Admitting “the situation remains tense,” IHS Automotive analyst Carlos da Silva nonetheless told the Associated Press he sees a positive side to a long-running downturn where “the rate of decline is slowing down.”

That’s little consolation to most automakers, the industry’s multi-billion losses continuing to mount.  S&P this week downgraded Ford stock citing both its struggles to reverse losses in Europe as well as the challenges it faces in China.

Ford was far from alone, however, in watching EU sales slide yet again in May. Only a handful of manufacturers were in the positive column, notably Mercedes-Benz, gaining 2.8%, while Mazda rose 30% and Jaguar/Land Rover gained 9.8%.

Money-losing PSA Peugeot-Citroen, Renault, General Motors, Ford and Fiat all experienced double-digit decline while European industry leader Volkswagen AG was down a slightly more modest 5.9%.

The European car market peaked in 2007 at nearly 16 million vehicles. It came through the global recession in slightly better shape than the U.S. market, where volumes fell by roughly 40% during the depths of the downturn. But while the American market began a slow recovery in 2010 and is expected to reach as much as 15.5 million vehicles this year, Europe’s downturn actually has been accelerating for several years due to the sovereign debt crisis triggered by Greece’s near financial collapse.

Some analysts are hoping that 2013 will see a bottoming out of EU car sales. That couldn’t come too soon for Ford and General Motors, both of whom have seen their balance sheets hit hard by losses on the other side of the Atlantic. Both makers recently initiated aggressive turnaround plans that include job cuts and plant closings.

Peugeot has taken similar steps while also tapping the French government for help.