Europe car sales plunge

FRANKFURT February 14, 2003: Beth Demain Reigber writing for the AP reported that Western European auto sales plunged 7 percent in January as worries about job security, war and a generally soft economy hampered big consumer spending.

However, some observers said the declines in a few countries were simply a retreat from a strong December, when sales surged on expectations that prices would rise. Also, a handful of markets had one fewer working day in January this year. These observers argue that momentum should pick up again, at least a little, as the year continues.

On the flip side, some industry analysts said the figures were a clear sign that we're in for another sick year of auto sales.

"The whole market performed even weaker than we expected," said Christoph Stuermer, senior market analyst at forecasting firm Global Insight. He said he's now likely to lower his forecast for a 3 percent drop in 2003 registrations.

The January registrations released by the Association of European Auto Manufacturers, or ACEA, skidded 7 percent in January to 1.19 million. Registrations mirror sales.

"These figures, coming after a strong result in December 2002, show a weak start for the year 2003, reflecting the general economic slowdown," the ACEA said.

Of the largest car markets in Europe, Italy's 15 percent drop in registrations was steepest. In December, sales had a 51 percent year-on-year surge as consumers raced to buy vehicles before the end of a government incentive program, which was later extended.

The biggest market, Germany, stumbled by 2.6 percent in January, kicking off what could be its fourth consecutive year of declines. Besides worries about war, rising fuel prices and job losses, demand has been capped by a government proposal to increase a tax on company cars.

Orders -- which indicate future production -- are also in steep decline, German auto industry lobbying group VDA said this week.