After a strong end to 2002, January produced the smallest crop of passenger car sales in Western Europe of any January since 1997, about 7% below last year's level, according to figures released by Oxford-based LMC/JD Power. Western European car sales in January are estimated at a little over 1.2 million units.

The forecaster said that the seasonally adjusted annualised selling rate (SAAR), at 13.7 million units, was also the lowest for five years.

But LMC said that January's weakness needed to be seen in the context of the exceptionally strong sales in December, and was partly caused by violent swings in the Italian market where government incentives ended in December and were then re-started in early January.

LMC said that continued weakness in German car demand could partly be blamed on uncertainty about plans to raise company car taxation. But in Western Europe as a whole, the weakening economic situation, rising unemployment and falling consumer confidence were cited by LMC as accounting for most of the decline in car sales.

To read the full analysis by LMC/JD Power click on the link: