The European car market suffered a difficult month in May, falling by 5.2 per cent to record its lowest May level in five years.

According to Automotive Europe the industry is finally seeing the anticipated slowdown with Volkswagen and Fiat suffering the worst falls.

The European Automobile Manufacturers Association (ACEA) said today (June 13th) that Asian manufacturers had continued to perform well but that the outlook for the European market remained extremely difficult.

'The prospects are pretty gloomy. Europe is facing a pretty sustained decline,' said Graeme Maxton, a director at UK-based consultancy Autopolis.

'It's going to force a few automakers to change their business models,' he added.

New passenger car registrations in May totalled 1.22 million, a drop from the 1.28 million a year earlier, with ACEA attributing the fall to sluggish economic conditions and the aftermath of the Iraq crisis.

May also saw Europe's year-to-date decline continue, with sales dropping 3.8 per cent for the first five months of 2003.

Car sales in some of the world's major markets, most notably the US and Europe, have endured a tough period in recent months, with the latest figures appearing simply to confirm analysts' fears.