EU automakers expect 25% output drop

Government handouts to car buyers has failed to halt the major slump.

Car production in Europe is likely to drop by a quarter this year as government handouts to car buyers fail to halt a major slump, EU automakers said Tuesday. European car manufacturer association ACEA said "cash-for-clunkers" programs in thirteen European nations had helped lift sales of small cars but had failed to make a major dent in overall demand. Vehicle producers are reacting by cutting back, ACEA said. Van and truck production more than halved in the first quarter, it said, while car output fell 31 percent to 3.1 million; car sales fell a slower 17.2% in the same period. ACEA expects car output to fall 25% over the whole year and the production of trucks, vans and buses to decline at least 50% as companies don't replace older vehicles.