Car sales in Western Europe fell by 8.7% year-on-year in January according to data released by LMC Automotive.

January's sharp plunge left the Seasonally Adjusted Annualised Rate (SAAR) of sales at just 11.7m units a year and will heighten concerns over recession and weak demand in Europe in 2012.

Car sales in relatively bouyant Germany were down by 0.4% in January and LMC forecasts that the year ahead will see a slight contraction to the German car market.

Sales in France were down by 21% in January, though January's decline was against a strong month last year when the French government's scrappage incentive support scheme was still lifting registrations.

Italian car sales plunged by 17% versus last year. The Italian car market will find the economy working against it over the course of the next year or so as fiscal tightening likely puts Italy in a prolonged recession.

The UK's car market was flat on last year, while Spain's car market – though slightly up - is continuing to run at a historically very depleted level.

LMC said that the worries over the eurozone debt crisis remain a key issue for business and consumer confidence in the region, and with most economies expected to contract in Western Europe this year, the car market is bound to suffer.

The sharp drop in the SAAR last month could also be indicative of heavy incentives as manufacturers push to meet end-quarter targets.

“What January does confirm is that 2012 is shaping up to be a difficult year,” said LMC analyst Jonathan Poskitt.

Hear more on Europe's outlook from Jonathan later this week at a just-auto webinar