Car makers facing production cuts

CAR companies across Europe fear they will have to make widespread production cuts in the autumn, even if August registrations in Britain defy the limp levels expected.

"At the new year the industry was forecasting 3-6 per cent growth for Europe in 1995," said John Lawson at consultancy DRI/McGraw-Hill. "Now it looks as though it will be zero. That means half a million cars will not be sold that were expected to be."

But output in the first half was 5-6 per cent higher than in 1994. "The European market is weaker than expected, and this hasn't been fully reflected in line rates," Mr Lawson said. "It will be the usual story - disappointment setting in over the summer and production cuts announced in the autumn." The turndown in car sales is part of the general downgrading in economic expectations that has swept Europe since the spring.

A quarter of the year's new cars will be bought during the month. If August sales are much better than expected that would be significant. But it is unlikely.

Glass's Guide to Car Values, which has monitored orders made through dealers, forecasts August sales of about 450,000, against last year's 453,000. DRI predicts they will end the year up a little on 1994's full- year figure of 1.91 million, but well off the 2 million that was being predicted a year ago.

The only good news is that British factories are unlikely to be affected as much as those in France or Germany, which are lumbered with strong currencies.