Figures issued today by the Brussels-based European carmakers' trade association ACEA show that European car sales dropped for a third consecutive month in March, declining by some 4.7% over the same month last year to 1.7 million units. The cumulative total for the first three months of the year was off 3.3% on the year-ago level at 3.99 million units.

Analysts said that the decline reflected sluggish demand conditions in the region generally as consumer sentiment was weighed down by low economic growth, persistently high unemployment and high gasoline prices.

European car sales may fall for a third year in four because of unemployment at a five-year high and a ``sharp'' increase in oil prices, ACEA forecast last month.

Some manufacturers are cutting back production this year and incentives have become increasingly commonplace since the middle of 2004.

According to a Bloomberg report, Renault yesterday said it has gradually cut production of the Modus minivan at Valladolid, Spain, to 900 units a day from a high of 1,350 vehicles daily in January and it has shut the Sandouville, France, plant for a week to reduce inventory of models built there. Renault's March sales in Western Europe fell 6.7 percent to 152,693 cars.

``There is clearly a slowdown in the market, marked by a difficult economic context,'' said Georges Dieng, an auto analyst at Dexia Securities in France, quoted by Bloomberg. ``I don't think it will change much any time soon.''

According to ACEA, car sales in Germany - Europe's biggest national market - declined by 0.4% in March and are 1.9% down over last year in the first quarter.

March sales also fell 5.1% in the UK and there was a drop of 8.6% in Italy.

Most carmaking groups experienced European sales declines in March, although BMW managed a year-on-year gain of 7.5% helped by the impact of the 1 Series, Toyota (including Lexus) was up 1.4% and Kia managed a product-led 85% increase.

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