European car sales rose 6.5 percent in 2016

* 2016 car sales in EU, EFTA reach 15.13 mln - ACEA

* VW brand sales dip, but remains market leader

* Mercedes (Xetra: 710000 - news) overtakes Audi (IOB: 0FG8.IL - news) to become top premium seller (Adds ACEA quote)

By Edward Taylor

FRANKFURT, Jan 17 (Reuters) - European car sales rose for a third consecutive year in 2016, with all major markets recording gains, industry data showed on Tuesday.

New (KOSDAQ: 160550.KQ - news) car registrations across the European Union and European Free Trade Area (EFTA) increased 6.5 percent, including a 3.2 percent rise in December, the European Automobile Manufacturers' Association (ACEA) said.

Volkswagen (IOB: 0P6N.IL - news) continued to lose market share in the wake of its emissions-test cheating scandal, but remained the best-selling brand in 2016, while France's Renault overtook local rival Peugeot (Other OTC: PUGOF - news) to take second place.

December registrations rose to 1.193 million cars from 1.156 million a year earlier with all major markets posting gains apart from Britain, the Brussels-based ACEA said.

The VW brand saw annual sales decrease 0.4 percent, but retained an overall market share of 11.4 percent. Renault (LSE: 0NQF.L - news) and Opel followed with market shares of 7.3 percent and 6.6 percent respectively.

Registrations over the full year in the EU and EFTA reached 15.13 million cars. In the EU alone, passenger car registrations increased 6.8 percent to 14.64 million.

"This positive trend is a sign that despite political instability and economic uncertainty following key events in 2016, such as Brexit or the Italian referendum, consumer confidence has remained robust," ACEA said.

Buoyed by a run of new vehicles such as the Kadjar SUV, Renault saw 2016 sales rise 12.1 percent to 1.52 million cars.

Daimler (IOB: 0NXX.IL - news) 's Mercedes-Benz sales rose 13.9 percent to 839,779 cars last year, overtaking Volkswagen Group's Audi brand to become the best selling premium brand in Europe. (Reporting by Edward Taylor; Editing by Georgina Prodhan and Mark Potter)