European car sales rise 5.7 pct in March but VW brand continues to suffer

* Europe car sales continue to rise, helped by incentives

* Demand for SUV's powers demand in core markets

* VW brand sees sales fall in March (Adds details, background)

By Costas Pitas

LONDON, April 15 (Reuters) - European car sales rose 5.7 percent in March, industry data showed on Friday, helped by discounts and other incentives, although sales for Volkswagen (LSE: 0P6N.L - news) 's core brand continued to fall in the wake of the emissions scandal.

Nearly every European country recorded growth last month, even though there were fewer trading days than last year when the Easter holiday fell in April, the data from the European auto industry association (ACEA) showed.

Italy recorded the strongest rise of any major market with demand rising 17.4 percent followed by France where sales increased 7.5 percent, but sales dipped marginally in Germany, Europe's biggest car market, and fell 0.7 percent in Spain.

Sales within the European Union have now risen for 31 consecutive months, hitting levels close to those recorded in 2007, shortly before the economic crisis began to hit the car industry, ACEA said.

The low oil price and cheap credit helped underpin demand across Europe, PWC said.

Discounts and other incentives remained at "high levels, the highest in the past five years," said JP Morgan analyst Jose Asumendi said.

Overall, registrations in Europe rose to 1.745 million cars from 1.652 a year earlier, according to data for the European Union (EU) and the European Free Trade Association (EFTA).

In these markets, sales of VW brand cars, which exclude the Audi (LSE: 0FG8.L - news) and Porsche brands, fell 1.6 percent in March, according to ACEA, despite the brand recording its best performance in Britain, Europe's second-largest car market, since September.

By contrast, VW's mass-market brand rivals Peugeot (Hanover: PEU.HA - news) , Ford and General Motors (NYSE: GM - news) ' Opel/Vauxhall all grew, with sales up 2 percent, 0.6 percent and 6.4 percent respectively.

In the first three months of the year, registrations in EU and EFTA markets increased 8.1 percent to 3.932 million vehicles compared to the same period in 2015, boosted by a 28 percent rise in demand in Ireland (Other OTC: IRLD - news) , a 26 percent jump in Portugal.

Analysts at JATO Dynamics said sales of sports utility vehicles in Europe's top five markets by sales jumped 22 percent in March. (Reporting by Costas Pitas and Edward Taylor, editing by David Evans and Susan Fenton)