At first sight the European car market
slipped badly in February, falling 3.7% to 1,101,548 from 1,144,300, according to
provisional figures just released by Acea. That had the effect of dragging the sector into
the red after two months trading, with sales down by 1.7% to 2,362,920 from 2,404,002.
That represents a dip of 41,082 units, but that does include a massive artificial dip of
143,306 units in the UK. The change in registration practise in the UK has so distorted
the figures that no true realisation of what is currently the demand will be possible
until at least the end of March, and possibly not with certainty until September.

Apart from the UK, only four countries
recorded sales levels down against last year for the two months, although Germany and
Switzerland joined Italy, Austria, Denmark and Norway in February itself. Italy seems to
have discovered a level of stability in February that many would not have expected yet,
and as that seemed to be mostly to the benefit of the Fiat Group, it remains to be seen
whether the improvement for the month reflected the underlying demand trend, or whether it
resulted from special sales campaigns and generous discount packages.

The Italian improvement in February made
quite a difference to the Fiat Group. Although still down by 10.5% for the two months,
they recorded a 1.3% gain in the month itself, at 143,742 from 141,885. Alfa Romeo
continues to grow in stature, but Lancia are still looking shaky and seem truly in need of
the remedial action that Fiat has planned for that division. Fiat traditionally does well
at the start of a year and the VW Group does better towards the end of one. The two months
table would seem to deny that statement, but the figures should be viewed from the
knowledge that the Italian market is easing out of recession, and the VW Group 1998
results were artificially low due to a chronic shortage of the then new Golf.

Many of the worst losses in the market to
date can be explained by the seeming collapse of the UK market. Ford, Honda, Rover, Nissan
and GM all enjoy reasonable results in the UK, as does Jaguar and Toyota and they have all
been affected by the deferral of a large chunk of sales from January and February to
March.