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Car production likely to decline 25% in Europe

CAR production in Europe will probably fall 25 percent and sales are likely to drop 20 percent this year because of the economic slump, the European Automobile Manufacturers Association said as it stepped up calls for more European Union aid.

The forecasts by the lobby group, also known as Acea, underline the pace of the economic downturn. The association was predicting a 15-percent decline in car output in Europe this year as recently as last week, when the European Commission said auto sales in the region would fall no more than 18 percent in 2009, according to Bloomberg News.

"We are seeing the slide continuing," Carlos Ghosn, president of Acea and chief executive officer of Renault SA, France's second-biggest car maker, said yesterday in Brussels. "We are not at the end of the tunnel."

Last year in Europe, car production dropped 7.2 percent and sales fell 7.8 percent.

The auto industry is pressing EU governments and regulators for emergency help as the recession and tighter credit hurt demand. The euro-area economy will contract in 2009 for the first time since the single currency was introduced a decade ago, according to the commission.

EU countries are offering billions of euros in aid to car makers and the European Investment Bank, the 27-nation block's lending arm, is stepping up loans for auto research.

At a March 1 meeting, EU heads of government ruled out a centralized rescue program for the industry while pledging more coordination of national initiatives such as fleet-renewal programs and a possible increase in EIB research loans.


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