FRANKFURT - Car sales in western Europe fell 7 percent last month as consumers steered clear of showrooms amid concerns over economic prospects and after a strong December, data released on Thursday showed.
Adding to concerns about the year ahead, European carmakers association ACEA said western European registrations in January fell to 1,189,538 vehicles, down 7 percent compared with a year ago. The figures sent auto stocks lower.
Renault, Fiat and Ford were hardest hit, notching up declines in sales of in excess of 10 percent and also losing market share in the region.
"These figures, coming after a strong result in December 2002, show a weak start for the year 2003, reflecting the general economic slowdown," said ACEA in a statement.
Experts are worried about the effects a possible war against Iraq could have on consumer sentiment and the overall economy, the main influences on demand for cars.
Last week, the Bank of England cut interest rates to a 48-year low, citing fears over worsening global and domestic demand. The European Central Bank, leaving rates on hold, also said a looming Iraq war had darkened the outlook.
Earlier this week, French carmakers warned that demand for cars could drop sharply in the region this year.
PSA Peugeot-Citroen chairman Jean-Martin Folz said "in an absolute nightmare scenario" the market could fall 10 percent to 15 percent, although a dip of as much as 2 percent was more likely.
Domestic rival Renault forecast a 2 percent decline, with a worst case scenario of a 6 percent or 7 percent fall.
Sales in United States, the world's biggest car market, fell about 2 percent in January.
In the last year weak, demand has led carmakers to introduce profit-eroding incentives and discounts in a bid to lure customers back into the showrooms.
Companies launching fresh models tend to suffer most from such an environment, as the new cars immediately fail to command the high prices needed to make the investment in product development pay off and for profit growth.
Renault, introducing new versions of its mid-sized Megane II this year, saw its sales drop 17.5 percent in January in western Europe and also lost market share.
"We're worried by recent sales developments and management caution," said Goldman Sachs in a note explaining its decision to cut its rating on Renault to "in-line" from "outperform."
By contrast, sales at Europe's second biggest carmaker PSA Peugeot-Citroen slipped just 1 percent, helped by a strong performance from Citroen, and it lifted its market share.
"When you bear in mind the sharp fall in its home French market, Peugeot has done pretty well," said Commerzbank analyst Robert Ashton.
Fiat Auto, struggling to return to profit amid plummeting sales, clocked up another poor month. Its registrations dived almost 23 percent and its slice of the European market fell.
Ford also suffered, with only Land Rover making gains. Sales of its Jaguar, Volvo and Ford brands all fell sharply.
Japanese carmakers solidified their position in Europe, with a particularly strong showing from Mazda, whose market share nearly doubled. Helped by new styling paying attention to European tastes, Japanese companies have in the last year or so started to make inroads into the European market.