New-car sales in western Europe fell 8.7 percent year-on-year in February, to just under 1.1 million units.
The decline prompted fears that, after the recent economic slowdowns in the USA and Japan, Europe could be the next region to suffer.
'There's a chance that the car data is trying to tell us something about the European economy and consumer confidence in general,' said John Lawson, auto analyst at Schroeder Salomon Smith Barney. 'In which case, you will have more to worry about than the car sector.'
After a weak January, 'there is still no convincing sign that the downward trend in the new-car selling rate has been reversed,' said Charles Young, director of research at J.D. Power-LMC Automotive Forecasting Services.
But 'there's no need to panic,' added Lawson. 'The sales figures may be down but they can turn very quickly. It's premature to assume that this is going to be much worse than a relatively flat year.'
Western European new-car sales hit a record high of 15.1 million in 1999, but they dropped 2.2 percent last year.
However, one reason for the drop in February was that 2000 was a Leap Year. February last year had one more working day in which to sell cars. So on a daily-selling rate basis, the market was down 4.2 percent.
New-car sales dropped last month in every country except the UK, where they rose 7.3 percent to just above 79,000 units.
There were steep falls of 20 percent or more in Belgium, Denmark, Finland, Ireland, the Netherlands and Iceland.
Germany - western Europe's biggest market - dropped more than 12 percent, to 240,000 units.
'Indications concerning incoming orders do not imply that an upturn [in Germany] is imminent,' said J.D. Power's Young. 'The selling rate still shows no signs of recovery from the persistently low demand that caused last year's 430,000-unit fall in sales volume [to 3.4 million].'
But ACEA, the European automaker's association, delivered a more upbeat message. 'It has to be kept in mind that in February 2000, record levels had been reached in the majority of the western European countries,' it said in a statement.
Furthermore, the association said, the sharp drops seen in some minor markets had to be adjusted for particular circumstances.
In the Netherlands, buyers had brought forward their purchases to December because of an impending rise in value-added tax, it said.
In Finland, the drop could be explained by customers waiting for changes in car taxation, ACEA said.
In Portugal, recent changes in taxes on sport-utilities led to a large pull-forward of purchases into the closing months of last year.
Most brands experienced sales falls in February. The only exceptions were Audi, Skoda, Alfa Romeo, Volvo, Nissan and BMW.
One of the most significant declines was at French automaker Renault. Its sales slumped 14.1 percent to 116,803 units.
'Sales of Renault's three core products - the Clio, Megane and Scenic - are all coming under competitive pressure because they are at the natural end of the cycle,' said Jim Wright, auto analyst at Lehman Brothers.
Elsewhere, sales at the VW group - which, as well VW, includes the Audi, Seat and Skoda brands - fell 8.8 percent to 203,304 units.
Although Alfa Romeo was up thanks to the popularity of its new 147 compact hatchback, declines at the Fiat and Lancia brands pulled Fiat group sales down 6.3 percent to 129,100 units.
Even though overall sales in the UK were up, domestic manufacturer MG Rover saw its sales crash by 46.7 percent to 7,284 units.
Most Japanese and Korean makes also suffered.
Mitsubishi registrations dropped 32.3 percent; Honda 31.4 percent; and Mazda 26.7 percent. Hyundai registrations fell 21.6 percent.
For the first two months of this year, new-car sales in western Europe fell 4.4 percent to 2.4 million units.
February sales by model, Page 22