Europe carmakers seen facing lower sales

BRUSSELS (Reuters) - Carmakers in the European Union will face falling sales this year after their output dropped 17 percent in 2009 due to the economic crisis, an auto association said on Thursday. Forecasts remain difficult to make but 2010 will be challenging as the economy has yet to recover, the European Automobile Manufacturers' Association said in an annual report.

It said passenger car sales should decline, especially in countries where fleet renewal schemes have ended, while commercial vehicle registrations were expected to be flat.

"Given the dimension and length of the economic downturn, pressure on automotive employment is mounting," it said, adding the European Union car sector now employed 2.2 million people and a further 9.8 million relied on the industry for their jobs.

The association said that in 2009 total vehicle production fell 17 percent compared with 2008 to 15.2 million units.

Truck production fell 64 percent to a historic low. Passenger car output suffered less thanks to scrappage schemes -- it dipped 13 percent to 13.4 million, its lowest since 1996.

The situation is improving, the association said, with passenger car production up 22.8 percent in the fourth quarter of 2009, compared with a low in the last quarter of 2008.

Compared with the pre-crisis level of the fourth quarter of 2007, car production dropped 7.6 percent in the last three months of 2009.

The report said Germany remained the largest vehicle producer in the 27-country EU, despite a 13.8 percent decrease over 2009 to 5.2 million units.

France fell to third place with a 20.2 percent drop while Spain became the second-largest manufacturing country in 2009, as output fell 14.6 percent to 2.2 million vehicles.

Britain, where output fell 34 percent, again ranked fourth, with just over 1 million units.

Italy fell to seventh place, after the Czech Republic and Poland, which accounted for nearly 975,000 and 879,000 vehicles respectively.

Following a decline in the second half of 2008 and first half of 2009, EU new car registrations picked up in the second half of last year. That partly reflected fleet renewal schemes implemented in 13 EU countries, the report said.

Demand was growing for small cars, it said. Their market share rose to 45 percent in 2009 from 38.8 percent in 2008.

(Editing by Dale Hudson)