KEY POINTS:
PARIS - Various taxes to penalise pollution or discourage the use of private vehicles for commuting distorted the picture for car sales in several European countries last year, while the 2008 outlook looks gloomy.
Worries about weakening consumer spending, oil at a record high and fears the US subprime mortgage crisis might spread to the real economy could all hit car sales, economists say.
In France, a spike in December sales ahead of penalties on big cylinder cars jacked up the full-year outcome to a tepid 3.2 per cent rise to 2.064 million, while in the Netherlands a looming rise in a tax on gas guzzlers boosted sales by 4 per cent to 504,197 cars, above industry expectations of 500,000.
In Spain, however, past tax moves depressed sales by 1.2 per cent to 1.614 million vehicles and the Anfac car manufacturers body said it expected 2008 sales of around 1.6 million. December rose 6.3 per cent, due to tax changes.
In Italy, 2.49 million new cars were registered according to figures published by the Transport Ministry, up 7 per cent.
Sales of cars among Fiat's three brands totalled 780,182 in 2007, up 9.2 per cent from 2006, giving it a market share of 31.3 per cent.
Fiat's performance in Italy was helped by tax breaks offered by the government to get drivers to buy new, less polluting cars. Fiat is best known for its small, fuel-efficient vehicles.
In Belgium the 2007 registrations were flat at 524,795 cars.
Germany, Europe's biggest car market, which may be over taken by Russia in the next few years, will report its new car registrations on Thursday.
The VDA German car industry body said earlier this month that 2007 would be the worst year on record and forecast sales to fall after a big increase in value-added tax on cars. For 2008, VDA saw a slight rise from these lows.
But that sentiment was not shared in neighbouring Netherlands where the BOVAG and RAI industry bodies said they expected a 3.4 per cent decline to 487,000 vehicles this year.
Britain usually releases car registrations on the 6th of the month. In November the cumulative figure was down 3.1 per cent with the SMMT industry body saying environmental factors were getting more important for car buyers.
In January a peak in expensive car sales, such as SUV's, is expected as the Dutch tax rules will come into effect on February 1.
This so called "gulptax" hits buyers of high fuel consumption cars. "We expect some customers to buy these cars before they become more expensive," a BOVAG spokesman said.
The French government has announced penalties for car pollution, from 200 ($387) euros to 2600 euros per vehicle, that came into force at the end of 2007. Cleaner cars can get a bonus of 200 euros to 5000 euros for electric cars.
The French market has been holding up just above 2 million car sales since 2003, with declines in 2006 and 2005, following boom years in 1999-2002 when sales were above 2.2 million cars.
This is in line with the general trend in western Europe and analysts expect the market to remain flat in 2008, or slip should the debt market crisis hit consumer spending.
"The European auto demand outlook for 2008 is mixed and uncertain, but we expect volumes to fall as economic growth in the major economies slows," said Stephen Cheetham, auto analyst at Sanford C Bernstein.
"The economic outlook for 2008 is for lower growth: on this basis we believe that car sales will fall around 1 per cent. This is a relatively benign outlook - we would expect a fall of 10 per cent or more in a full-blown consumer recession as occurred in the 1970's and 1990's," he added, saying car companies' share valuations were relatively high.
The European Union in December announced plans to tax vehicles for their CO2 greenhouse gas emissions, causing an uproar in Germany where a big automobile industry is a huge economic motor and prompting France to say that makers of big cars were getting off too lightly.
The political process to put these rules in place has still a long way to go.
- REUTERS
