European car sales have worst October since 1996

Weak showings in Britain, France and Spain pushed new car sales in Europe down 2.6 per cent in October despite fierce discounting and a wave of new models, industry data showed.

Excluding purchases in the new EU members in eastern Europe, the sales data marked the weakest October since 1996.

Snapping four consecutive months of year-on-year gains, new car registrations in 23 European Union countries plus Norway, Switzerland and Iceland fell to 1.16 million units even though Germany - the continent's biggest market by far - grew again.

"With a number of working days that was substantially the same (with the only exceptions of Germany and Slovenia, which had one less trading day), this figure points out to market conditions that remain uncertain," Brussels-based car industry group ACEA said.

It cited a decelerating British economy, amid higher interest rates and steep fuel prices, and the impact of strikes in Spain.

The October decline brought 10-month sales across Europe to 12.98 million units, 0.3 per cent below the same 2004 period.

Most Asian carmakers turned in solid performances, with registrations for South Korea's Kia Motors advancing nearly 18 per cent in October and almost 53 per cent in the year to date, cementing its role as the fastest-growing brand in Europe.

Suzuki Motor Corp registrations swelled by a third and Honda Motor Co gained 17.6 per cent last month, but Nissan Motor Co sales dropped by a third.

Volkswagen, Europe's biggest carmaker, bucked the trend by boosting registrations 2.9 per cent in October to secure a 21 per cent market share.

Stuttgart-based premium carmaker DaimlerChrysler also extended its rebound as a strong showing at Mercedes-Benz offset weaker sales at its Smart mini-car brand.

But BMW, the world's biggest premium automaker, had a rare stumble, with October registrations off almost eight per cent, led lower by its core BMW brand.

Registrations at Italy's struggling Fiat group retreated 5.3 per cent, with the Fiat brand down 3.4 per cent even though October was the first full month of sales for the new version of its Punto.

The Punto is Fiat's most popular model and its success is crucial for Fiat's recovery plan.

French carmaker Renault saw its registrations drop 11.5 per cent even though it launched its new mid-size Clio III - voted European car of the year this week - in September.

US carmakers that are depending on Europe to take up the slack of their weak domestic market had a disappointing month. General Motors' registrations fell 6.1 per cent while Ford Motor Co's numbers eased 1.6 per cent.

Figures compiled by ACEA showed that registrations in the 15 older European Union members plus Norway, Switzerland and Iceland slipped 2.6 per cent in October to roughly 1.11 million units, leaving sales in the first 10 months up 0.3 per cent at 12.37 million cars.

Higher unit sales do not necessarily relate to higher profits for carmakers in a sector where chronic overcapacity keeps prices under pressure.

Slack sales so far this year have put the pinch on carmakers already squeezed by a strong euro and high raw materials prices that keep dragging on margins.

Oil prices are off this year's highs but still keeping fuel costs a concern for motorists, which hurts consumer confidence and restricts spending power.

Automakers are trying to counter these headwinds by slashing costs, increasingly by cutting thousands more jobs.