The head of a leading European auto lobby group has predicted that the continent's vehicle market will see a further drop in sales in the fourth quarter and called on the EU to establish a supportive framework to secure the auto industry's future.

Christian Streiff, the head of the European Automobile Manufacturers Association (ACEA) said yesterday that while there had been a drop of around 10% in auto sales in the third quarter, the fall in the fourth quarter could be even worse.

Speaking to just-auto today, ACEA director of communications Sigrid de Vries, said: "We have seen a rapid drop in registrations over July, August and September and they (vehicle manufacturers) all expect that sales will further decrease."

She said that the fall had meant it was both more difficult to sustain daily operations and to sustain the high levels of investment needed due to the levels of legislative pressure in Europe.

"After housing, cars are the second largest expenditure that many households make and clearly they are more hesitant in making these expenditures and there is a drop in demand and you see that across all sectors in the market," she said.

Streiff, who is also chief executive of PSA Peugeot Citroen, made the comments at a news conference following a conference at the European Commission in Brussels.

The ACEA said the conclusion of the conference had been to call for a supportive framework from the EU to secure the auto industry's future.

"The European automotive industry is experiencing extremely difficult times with the sharply declining economic circumstances further limiting the manufacturers' scope to absorb regulatory requirements and to respond to both changing and reluctant consumer demand. The industry, which is key to the European economy, urgently needs a supportive framework to secure its future; and the EU has the means and tools to make it work," the ACEA said.

"The fallout of the financial crisis has only increased the urgency to further improve the automotive policy framework. Over the past weeks, various manufacturers have announced they would scale back their production as a consequence of the current trend. We welcome the fact that the Commission has confirmed the strength and competitiveness of the automobile industry to be a top priority", said Streiff.

The ACEA said a supportive framework should consist of four pillars: better regulation, reciprocal trade relations, a low-interest loans package and market incentives.

The European Commission yesterday agreed to back a call for EUR40bn (US$50.9bn) in soft loans to help develop cars which meet toughening European Union CO2 emissions targets.

"Loan subsidies could be provided via the European Investment Bank," EU industry commissioner Guenter Verheugen was quoted as saying.

A statement from the Commission said: "Car makers have pressed the EU for a EUR40bn loan to help develop greener vehicles. The idea gained support in Europe after the US recently approved EUR20bn ($25bn) in low-interest loans to the American auto industry to finance more fuel-efficient cars.

"The limits on car emissions are part of a climate-change package that the EU aims to pass by the end of the year. The commission has urged EU governments not to let the package fall victim to the economic slow-down."