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By Madeline Chambers
FRANKFURT, Nov 14 (Reuters) - New car sales in western Europe slipped last month, dampening hopes of a strong rebound in demand, with most local automakers losing share to their Japanese and Korean rivals, data released on Friday showed.
Brussels-based carmaker association ACEA said October sales fell 0.3 percent in the region, bringing the total number of cars sold in the first 10 months of the year to 12.19 million, a 1.3 percent drop from a year ago.
The main winners were Japanese companies, including Nissan , Mazda and Toyota , and also Korean rivals Hyundai and Kia .
Their gains in the last year have fuelled worries among European makers that they could eventually pose as much of a threat in Europe as they are doing in the United States.
Europe's top two automakers Volkswagen and PSA Peugeot-Citroen and Ford Europe suffered sharp volume and market-share losses.
European auto stocks were down 0.6 percent at 0821 GMT, slightly underperforming the broader market , with VW, set to announce a 10 percent cut in its five-year capital expenditure plans.
"This basically flat result seems to point towards a stabilisation of the market, in line with most economic indicators," ACEA said in a statement.
Experts now anticipate a gradual upturn in auto demand in 2004 after a sales drop of about two percent this year, a result of weak economic conditions, subdued consumer sentiment and a dearth of new products.
Flagging demand has taken its toll on carmakers' profits this year which have also been eroded by buyer incentives introduced by companies in a bid to hold up sales.
"There are still a lot of incentives in many countries and although that helps sales to some extent, it is bad for revenues," said a spokesman from ACEA.
Auto sales rose 0.2 percent last month in the United States where profit-eroding buyer incentives have supported demand. While the U.S. economy may provide customers with growing income and jobs to keep vehicle sales healthy, some analysts note the incentives have resulted in a low level of pent-up demand.
JAPANESE GAIN
Asian carmakers, a major competitive threat to General Motors , Ford and Chrysler in the United States, are also gaining ground fast in Europe.
"The Japanese and Koreans had to restructure and adapt and rethink earlier than the others... they have efficient processes and they are on top of a wave of new models," said the ACEA spokesman.
Among the Japanese makers, the biggest gainer was Nissan but Toyota is still the largest player.
Italy's Fiat , in the midst of a turnaround plan aimed at reversing steep losses, failed to show much improvement overall in Europe although the decline in volumes was less steep than earlier in the year.
It is banking on a sales boost in the fourth quarter and next year from its new Fiat Panda and Lancia Ypsilon.
Luxury carmaker BMW and France's Renault made modest gains.
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