THE European car market will remain flat in the near future, and manufacturers having to push volumes will mean falling residuals.

Max Warburton, head of global automotive research at UBS Investment Bank, said manufacturers competing in Europe would either be battling for market share by upping their sales, or looking for an escape from the market. With German manufacturers like DaimlerChrysler, Volkswagen Group and BMW becoming more competitive, the losers in the battle seem likely to be either the French carmakers or the financially-beleaguered American giants GM and Ford.

The UK will be the ‘pressure valve’ for excess supply from Germany and Britain can expect big volume pushes in the coming years.

The UK also remains a key focus for Asian manufacturers, with the Koreans in particular keen to use newly-developed diesel engines to establish an increased presence here, even if they rely on their domestic market to actually make money.

With increasing volume being the name of the game in today’s market, residuals can only go down, Warburton warned.