During the first four months of 2009, new car registrations dropped by 15.1% in Western Europe - and by 21.4% in the 10 new EU Member States.

The market contracted by 4.8% in France, 16.3% in Italy, 28.5% in the UK, and 43.7% in Spain. Registrations in Hungary and Romania fell sharply, by 51.5% and 51.8% respectively. Germany was the only market in the former EU15 Member States where the number of new registrations actually increased - by 18.4%. Also in Poland, the Czech Republic and Slovakia, the number of new car registrations was positive, increasing by 2.4%, 19.0% and 43.5% respectively.

The automotive sector is hugely important in developed economies. A car is, after housing, the most expensive purchase that most consumers buy, or aspire to buy. Automotive manufacturing accounts for approximately 7% of all manufacturing in the European Union. Together with the extremely valuable supply chain, branch estimates claim that one third of all EU manufacturing relies on this sector.

As cars are generally bought on credit, car manufacturing was one of the sectors hit hardest and earliest in the current recession. The depth of the recession, as well as concerns regarding the timing of a recovery has generated huge uncertainties, leading to a massive decline in demand across the board.

The new Eurofound report looks at recent restructuring trends and policies in the automotive sector. It gives an overview of European and Member State initiatives which aim to deal with the reduced demand while maintaining employment levels. The report looks in particular at short-time working in France and Germany, a range of other initiatives introduced by car companies across the EU and also how Ford-owned Volvo Cars in Sweden put measures in place to deal with the crisis.