Spanish and French car sales dive

New car sales in Spain and France fell in October as consumers tightened their belts in preparation for a prolonged economic slowdown.

Sales of new cars in Spain fell 40% compared to the same month last year, while sales in France fell 7.3%, the national carmakers' associations said.

Year-to-date sales in Spain are now down almost a quarter.

The financial crisis across Europe also means consumers are finding it more difficult to fund large purchases.

The Spanish automobile manufacturers' association, Anfac, said sales fell to 77,660 vehicles in October, down from 129,384 during the same month in 2007.

The 40% fall represents the third largest monthly year-on-year percentage drop on record.

Sales for the first 10 months of the year stand at 1.03m vehicles, 23.8% fewer than the same time last year.

Lack of credit

Anfac blamed the lack of credit, rising unemployment and falling disposable incomes for the drop in sales.

In France, sales of French-built cars fell 8.1%, to 92,923 vehicles, according to the carmakers' association the CCFA. Sales of imported cars fell 6.5% to 82,019.

"It's a catastrophe. We've gone from 1.2m euros (£957,000) turnover in February to 500,000 euros last month. I've had to cut 40% of the staff," said the manager of a French parts supplier.

The figures were released on the same day the European Commission warned that the EU economy is expected to "grind to a halt" in 2009.