Western Europe enjoyed a strong surge in car sales during the holiday period, as the level of new registrations underlined a growing momentum in the region.

Figures released by the ACEA showed that new registrations rose by 7.7 per cent in December, with both BMW and DaimlerChrysler leading the charge.

According to the manufacturers' group, incentives and new models helped to energise the market, building on a solid November to record more than one million units last month.

The figure means that a total of 14.5 million cars were sold in 2004, marking an increase of 2.1 per cent on the previous year.

However, while ACEA welcomed "an encouraging end of the year", some industry figures are unconvinced.

Ford Europe chairman Lewis Booth told Reuters that the market would be "at least as challenging in 2005 as in 2004", adding that a patchy performance in Europe's leading car market - Germany - remained a potential source of concern.

"We still see no retail demand in Germany and until we see signs of retail customers coming into showrooms in Germany the European industry is going to stay challenged," he explained.