Car makers fear more losses in the sector

The eurozone crisis has turned long-standing overcapacity into an urgent problem for mass-market manufacturers, although German automakers, seen as having the most valuable brands, are weathering the storm better than rivals.

Carmakers fearing European demand will stay weak for years are battling to cut production, their restructuring efforts often met with opposition from governments worried about rising unemployment.

Most are already struggling from a dire 2012, when annual sales slumped 8.2 per cent to a 17-year low of 12.05 million vehicles as consumers in recession-hit European economies postpone purchases.

The March sales figures suggest an even worse year for the industry and forecaster LMC Automotive sees this year’s sales dropping 3.1 per cent in Western Europe to 11.4 million vehicles.

March was particularly bad because it contained fewer working days than a year ago, industry groups in France and Spain said.

French car sales fell 16.4 per cent in March and 14.7 per cent overall in the first quarter.

The March decline also reflected a smaller number of days than in the year-earlier period. Adjusted for these calendar effects, French car registrations fell 12.5 per cent last month and 12 per cent in the first quarter.

Sky-high unemployment and limited credit have hit car sales badly in Spain.