Discounting will remain fierce in the European car industry until sales volume picks up, according to Ford Europe sales chief Roelant de Waard.

Although industry executives believe the worst is now over, with second quarter results showing carmakers are getting control on their costs, there is little choice but to offer incentives and discounts to underpin sales, even though they hit profits.

De Waard told Reuters: “From a pricing perspective I'm not seeing any relief at the moment. Customers seem to be aware that we are in a recession - as an industry, as a region - so they're expecting very good deals.”

Sales in the company's 19 core European markets rose 8.7% to 90,000 vehicles in July. However, confidential market research seen by Reuters indicated that discounts by mass market car brands jumped 17% from a year earlier to an average EUR2,518 (US$3338) per vehicle in May across Europe's five biggest markets.

De Waard said much of the problem stemmed from under capacity with car plants capable of producing 4m more vehicles than currently required to meet demand in Europe.

He added: "We come from an industry of 18m and even at that level there was overcapacity. And while there has been activity by us and our competitors to adjust capacity, it will take a while before it's actually gone - it's really the end of next year that the first plants really close."

Ford estimates its pretax loss in Europe will be stable at about US$1.8bn this year [revised down after the Q2 results from an earlier estimate of $2bn - ed]. It recently closed two manufacturing operations in the UK and plans to shut its Genk plant in Belgium at the end of next year.