Berlin - High fuel costs and deepening economic uncertainty resulted in European car sales slumping sharply in September, the industry association said Wednesday with auto registrations at their lowest level in a decade.

Annual registrations fell 8.2 per cent last month, the Brussels-based European Automobile Manufacturers' Association (ACEA) said as the fallout from the world financial crisis hits Europe's car markets.

"The credit crunch weighs on the sector's ability to finance daily operations," the ACEA said.

"Customers are increasingly hesitant to make large expenditures and find it more difficult to get their purchase financed," the association said, with falls in sales for carmakers such as General Motors and BMW as well as leading Asian auto groups spearheading the total decline.

The drop in September was unusual, the ACEA said, as car sales normally pick up after the slower summer months.

This resulted in registrations hitting their lowest level since September 1998.

Car registrations in Europe were down 4.4 per cent in the first nine months of the year, compared to the same period last year, the ACEA figures showed.

"The drop in registrations confirms the aggravating market circumstances, as the fall-out of the financial crisis hits auto manufacturers hard," the ACEA said.

While General Motors car sales dropped by 18.1 per cent year on year in September, BMW, the world's leading luxury auto group, fell 15.4 per cent.

Toyota was down 6.8 per cent, while other Asian carmakers reported steep declines.

Korea's KIA fell 13.3 per cent, but Japan's Mitsubishi reported a 27.1-per-cent slump, and Honda posted a 26.3-per-cent drop.

The ACEA figures show a solid year-on-year 7.8-per-cent rise in September car sales in Central Europe was offset by a sharp 9.3-per-cent slump during the month in key Western European markets.

Over the first nine months of the year, new passenger car registrations in the Central European region gained 3 per cent, thanks to a robust performance by markets in Poland and the Czech Republic which reported hefty increases of 8.8 per cent and 10.4 per cent respectively.

At the same time, car registrations in Western European fell by 5 per cent between January and September, dragged down by big falls in the auto markets in Britain (7.5 per cent), Italy (11.3 per cent) and Spain, which posted a 22-per-cent fall.

Economists believe that all three nations are facing recession as sharp contractions in housing prices undermine broader economic activity and consumer demand. (dpa)