This year, the predicted outlook for new car registrations has been cautious following the record figures that were set in 2002. However, two of Europe's largest markets, Germany and the UK, now look set for a repeat performance. But the continued strength of the euro is subduing celebration as it means European manufacturers are increasingly dependant on domestic sales.

The Society of Motor Manufacturers and Traders (SMMT) is expecting 2003 to be a record year for UK new car registrations. Even though November's sales of nearly 170,000 represent a 1.5% fall on the same period last year, the industry still expects full-year 2002 figures to be exceeded. If December sales reach just 141,400, a 2.2% fall on last year, a record total will have been registered for the third successive year. Once again, the Ford Focus topped the sales charts in November, followed by a strong showing for Renault's Clio supermini and Vauxhall's Corsa.

SMMT chief Christopher Macgowan said: "At the beginning of 2003, the industry expected new car registrations to cool, forecasting a 6% dip on 2002's total. However, a truly amazing market throughout the year has exceeded all expectations...A range of new models, good deals and strong consumer spending have sustained growth in the market although sales have cooled over the last couple of months."

As 2003 progressed, another record year looked increasingly likely in the UK, but the story in Germany was rather different. Sales have remained subdued, but despite this, the German car industry association VDA expects German 2003 registrations to match the 3.25 million figure recorded last year, as November sales edged 1% higher than in 2002 to 258,000 vehicles. VDA expects an even stronger showing next year as Volkswagen's new Golf model enters the market.

Earnings next year may still be hampered by the increasing strength of the euro against the dollar. This will make European manufacturers more reliant on domestic sales. German moto manufacturer stocks are especially sensitive to currency movements and their harmful effect on exports.