Small is beautiful for carmakers

New car registrations fell by 7.3 percent in July and 15.6 percent in August compared with a year ago because of a general deterioration in consumer confidence and the effect of continuing high fuel prices. Over the first eight months of the year, new car registrations in Europe fell by 3.9 percent.

In Brazil, carmakers expect sales to slow in the second half after a spike in July. In Russia, August sales of imported cars were up 23 percent but that compares with the 40 percent of July. China's car sales fell 6.34 percent in August.

LUXURY LOSES SPARKLE

Luxury and sports car groups such as BMW (BMWG.DE), Daimler's Mercedes (DAIGn.DE) and Porsche (PSHG_p.DE) are generally less impacted by a general market downturn and have bigger margins that give it some pricing leeway.

But a shake-out of jobs in investment banking and a drop in 2008 banking bonuses may also hurt their sales.

"Easy credit has made luxury cars available to a much wider audience. The tightening up of credit could hurt them more than most," said Nomura International analyst Michael Tyndall.

But it is not all doom and gloom.

"Europeans will continue to drive cars. The fuel efficiency of those cars will change, in part because of high oil prices, and because regional governments are almost universally increasing CO2 taxes," Tyndall said.

Technological developments allow for greater fuel savings in the coming years compared with current models, so the impetus for drivers to buy new cars will increase.