New car registrations in February were an improvement over the previous month, but could not match the figures released a year earlier. Sales are likely to continue falling short of last year's results, increasing competition across Europe and potentially leading to US-style discount schemes if the market fails to recover.

According to figures released by the European Automobile Manufacturers Association, new car sales fell 3.5% in Western Europe for the month of February compared to the previous year. However, the figures were considered an improvement over January's performance, when new car sales fell by 7%.

Just over one million new cars were sold, with Finland, Italy, Sweden and Austria all posting increases. Falls were seen in Germany (-0.1%), the UK (-5.8%) and France (-7.9%).

Most of the larger European manufacturers experienced falling sales; BMW registered nearly 16% less than a year ago despite an increase in Mini sales. Sales of VW fell 2.2%, PSA 1.6%, Ford 3.5%, Renault 8.4% and GM 3.5%.

GM was however boosted by an increase at Saab, where sales were up nearly 9% as the latest 9-3 model takes hold.

Of major concern are the figures for Fiat. The Italian market was boosted by the government's decision to re-introduce an incentive scheme for older vehicle disposal. The Italian market increased by 8.1% and as number one in this a buoyant market, Fiat should have improved its performance. However, it posted a fall in sales of nearly 13%, exacerbating its recent declines.

The figures held good news for the smaller manufacturers however, with MG Rover increasing its sales by more than 8%. Korean manufacturers, including Hyundai, enjoyed a collective increase of 10.8%, indicating a move toward cheaper transport as the economy continues to slow.

The current outlook for the market is that sales figures will continue to fall short of the records posted last year. This will no doubt increase competition across Europe, and could lead to US-style discount schemes if the market fails to recover.

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