Dire year for Europe auto sales

MILAN Mon Jan 5, 2009 2:32pm GMT

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MILAN (Reuters) - A fresh round of weak data sealed a dire 2008 for European car makers on Friday as Spanish sales nearly halved in December and Italy reported a double-digit fall.

At the end of a year which saw the industry worldwide face slumping demand as the credit crunch bit, Spanish car sales were down 49.9 percent in December compared with the same month last year

They were over 28 percent lower in 2008 vs 2007, their sharpest ever yearly drop, according to Spanish industry group

ANFAC.

In Italy, Europe's fourth biggest market, new car sales fell 13.3 percent in December from a year ago -- less severe than November's 29.5 percent collapse as a last-minute rush to take advantage of incentives ending on December 31 provided some support.

Belgian car sales suffered a shallower fall, down 7.84 percent in December.

Europe's top three markets by sales - Germany, France and the United Kingdom - have yet to report December sales figures.

In Italy, 2009 is looking no better with industry body ANFIA forecasting sales could be below 2 million if the Rome government did not act to help car makers.

"The outlook for 2009 is certainly not rosy," ANFIA said. Think tank Promotor has already forecast Italy's 2009 new car sales will fall 13.5 percent.

Incentives to trade in older, more polluting vehicles ended on December 31 in Italy and the government has yet to extend them.

Industry Minister Claudio Scajola said last month the country would wait to see what help the United States and Europe planned for car makers.

France and Germany have already pledged financial aid for their car industries.

Italy's leading car maker Fiat FIA.MI admitted last month that it needed a partner to survive -- a confession seen as putting pressure on the government for help as much as an invitation to potential buyers.

Fiat's sales fell 15.2 percent in December after a slide of 28.6 percent in the previous month. Its shares closed on Friday up 6 percent before the data was released as the market bet on a smaller drop in sales than November.

Italian Prime Minister Silvio Berlusconi, the country's richest man, said last week even his son Luigi had put off buying a new car because of the economic crisis.

European car makers have trimmed working hours, extended holidays, shut down factories and cut jobs to reduce output to face the falls in demand.

In the United States, the situation is so dire that the Bush administration has promised over $17 billion to bail out car makers General Motors (GM.N) and Chrysler LLC CBS.UL.

On Friday, Ford Motor Co (F.N), the No. 2 U.S. automaker, said it expected industry-wide December U.S. auto sales to drop by some 35 percent with no sign of a turnaround in the first quarter of 2009.

(Additional reporting by Jonathan Gleave in Madrid; Editing by David Cowell)

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