Competition between car makers in Europe, the United States and Japan is set to increase this year, according to the study by Standard and Poor's, an international credit ratings agency, which suggests that car makers will be setting their sights on emerging markets.

In the United States, sales of light vehicles are due to fall slightly in 2006, due to rising petrol prices and interest rates, the study said.

A total 16.9 million cars were sold there in 2005, a rise of 0.5 percent compared with the previous year.

Lower sales are likely to increase competition between Ford and General Motors (GM), which could lead to more sales promotions and smaller profit margins.

In Europe, passenger car sales, which decreased by 0.7 percent in 2005, are due to stagnate this year or at best regain 1.0 percent if prices drop.

Sales projections vary across the continent, the study showed.

In Germany the market is picking up and Spain is set to stay the most dynamic European market after a 0.8-percent increase in sales in 2005.

Meanwhile, the Italian and British markets are set to contract. In Britain sales fell by 5 percent in 2005.

The French market is due to remain stable due to stagnant purchasing power there.

In Asia, Japan saw a slow year for private car sales in 2005 and the trend is set to continue this year, the study said, despite a preference for smaller and smaller models because of rising petrol prices and an ageing population.

China, however, has seen its market leap forward with an increase of 60-70 percent in car sales in recent years and is due to maintain a rhythm of 10 to 15 percent more sales each year. Sales exceeded 3 million units in 2005.

However, intense price competition has trimmed profit margins for the two most-established car makers there, Volkswagen and GM. This trend is likely to increase when car groups finish expanding their production capacities.

Chinese car exports are also accelerating, jumping from 1,000 units in 2003 to 170,000 in 2005, a figure higher than the number of cars imported.

The Indian market is following the Chinese trend. In both countries there are still less than 10 car owners per 1,000 people who are old enough to drive.

On a lesser scale, Russia also promises a strong sales potential, the survey said.

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