By Steve Goldstein

LONDON (Dow Jones) -- Last year was the worst for European car sales in 15 years, with 2008 sales falling by 8%, a trade group said Thursday.

The European Automobile Manufacturers Association, known by its French acronym ACEA, said new passenger car registrations dropped by 8% to 14.7 million units.

Car sales to a large extent mirrored the troubles in the broader economy. In countries where house prices have plunged, car sales have done even worse, with Irish sales dropping 62% and Spanish sales tumbling 50%.

The declines weren't as steep in the four largest markets but were still grim: Germany sales fell 7%, French sales dropped 16%, Italian sales fell 13% and U.K. sales dropped 21%.

The European Central Bank, which sets interest rates for the 16-nation euro zone, cut interest rates by a half-point on Thursday in response to the sluggish economy.

In December, car sales plunged 18%, though that wasn't as bad as the 26% hemorrhaging in November.

U.S. car sales dropped by even more in December, falling by more than one-third.

The European trade group put the slightly better December performance down to having two more working days, compared to two fewer in November.

Virtually all the major manufacturers shared in the pain, though 2008 sales at Nissan Motors (NSANY) rose 9%. Mazda's sales edged a modest 1% lower.

For the market leader, Volkswagen , sales fell 4%, including a 5.5% drop in December.

PSA Peugeot Citroen saw sales skid 9% for the year and 11% in December.

The Americans did even worse: Ford Motor (F) sales dropped 8% for the year and 16% for December, and General Motors (GM) sales skidded 15% for the year and the month.

Chrysler, which has a dismal 18th place, saw sales fall 23% last year and 59% in December.

Also having a rough December was Toyota Motor (TM), which saw a 38% drop en route to a 14% sales retreat in 2008.

And 2008 was the good news

While 2008 may have been gloomy for the European auto sector, analysts at Citigroup said things are only going to get worse.

In a note published Thursday, they said they are anticipating a 15% drop in volumes in 2009. And they say that even though manufacturers cut European vehicle production by 24% in the fourth quarter, they still may have to cut inventory levels further.

The big European auto firms will almost all decline to pay dividends. Operating margins, which probably will fall to 3.9% in 2008 from 6.2% in 2007, will be an ugly 0.2% this year, the analysts say.

And stock prices aren't discounting the possibility that 2010 also will be negative year, the analysts said.

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