The European new car market was down 2.6% year on year last month while Volkswagen was Europe's best selling brand and the Fiat Punto was Europe's best selling car, according to JATO Dynamics.

The first two months of the year have seen the market fall by 0.6% (15,228 units) to 2,357,591.

As other analysts have noted, Jato said a core reason behind the drop was continued pressure on the German market brought about by the revised VAT taxation regime introduced at the start of 2007 which caused a 15.1% drop in sales when compared to February 2006. The country was 12.8% down, year to date, as a result of retail customers bringing forward the purchase of new vehicles at the end of 2006 to avoid the rise in VAT from 16% to 19%.

However, while many of the core western European markets struggle to match last year's volumes, many eastern European markets are enjoying unprecedented growth. Latvia stood out as a market enjoying an 84% increase in sales over February last year.

Volkswagen is once again Europe's best selling brand, ahead of Opel/Vauxhall and Ford which has seen sales improve by 3.0% in February and a 1.6% increase year to date thanks largely to the success of the new S-Max MPV. New model introductions continued to be the most important factor in driving sales growth for manufacturers.

The Fiat Punto continues to enjoy sales success and was Europe's best selling new car in February 2007 with 32,059 units sold. The Peugeot 207 was second with 30,345 units sold and the Opel/Vauxhall Corsa dropped to third place with 28,541 units sold. The Renault Clio, Ford Focus, Opel/Vauxhall Astra, VW Golf, Ford Fiesta, Fiat Panda and VW Passat completed the top 10.