West European car sales were down by just 7% in March, showing a marked reduction in the rate of decline compared with earlier months, in year-on-year terms, according to data released by JD Power Automotive Forecasting.

JD Power said that the increasingly effective scrapping and OEM pricing incentives are part of the explanation for this, but also noted a favourable calendar impact which means more selling days in March this year over last.

Dave Leggett interviews Pete Kelly of JD Power

But the forecaster said there 'can be no missing how effective the double incentive is proving to be in Germany, in particular'. It also said that France and Italy registered some improvements in the car market related to their incentive schemes.

In Spain, however, the market appears unable to respond to incentives, such is the severity of the economic slowdown.

The West Europe seasonally adjusted annualised rate of sales improved to 12.5m units a year and JD Power said it has increased expectations for the full-year 2009 market as result (to 11.9m units - down 12.6% on 2008).

The German car market was up by 40% in March and the year-to-date market was up by 18%. The selling rate dipped away from the blistering level of February, but remained strong, at 3.8m units a year.

JD Power said that some upside risk remains for the UK market where a scrapping incentive scheme is still under discussion but not yet assumed in its forecast expectation.

The forecaster cautioned that the European car market may fall back when incentives are removed because of the 'bring forward' effect. In Germany, the incentive scheme is soon to run out of funds, though it will probably be topped up — yet the incentive may not continue in its current form and the size of the rebate may be reduced.

Meanwhile, the novelty of incentives, and also the stock of eligible applicants, may also begin to dwindle after the next few months.

JD Power also noted that Western Europe is bracing itself for a wave of job losses as Europe's worst recession in many decades matures. This will likely bring about a renewed mood of caution among buyers later in 2009, it said.