Investment bankers Goldman Sachs said western European car sales will drop 20 percent in 2009 to 10.7 million units.
The outlook is worse than the investment bankers predicted in December. At that time they expected a 15 percent decline to 13.5 million.
Given the significant declines we are forecasting, the associated operational volatility poses an unprecedented management challenge, Goldman Sachs said in a January 12 report.
Earlier this month, J.D. Power Automotive Forecasting cut its 2009 western European auto market forecast by 600,000 units following bleak sales in December. The company now sees volumes down 16 percent to 11.39 million for the full year -- a level last seen in 1993.
The gloomy predictions follow a bad 2008.
European new-car sales dropped 7.8 percent to a 15-year low of 14.71 million units, according to ACEA, the European carmakers association.
Spain was the hardest hit of the top five European markets. The countrys unit sales were down 28.1 percent to 1.16 million cars. The slump was triggered by the economic downturn that resulted from the end of the countrys real estate and construction boom.
Italy, down 13.4 percent to 2.16 million cars, and the UK, which fell 11.3 percent to 2.13 million, also suffered during 2008.
The other two large European markets -- Germany and France -- showed small sales declines. German sales were down 1.8 percent to 3.09 million units, the lowest level since 1990. The drop in Germany was not as severe as in other top European markets because sales took a hard hit in 2007 following the increase in the countrys sales tax to 19 percent from 16 percent.
France saw sales dip 0.7 percent to 2.05 million. French sales were helped by a new tax regime that provides bonuses of up 5,000 on models that have very low or no emissions.
In 2008, Poland overtook Romania as the largest market for new-car sales in central and eastern Europe.
Polands sales rose 9.4 percent to 320,000 while the volume in Romania fell 8.7 percent to 285,000 units.