Euro area's business confidence remains solid

EC economic sentiment (+1.5 points to 105.6) and PMI manufacturing (-0.3 points to 52.0) for September continued to paint a fairly rosy and resilient economic picture amid the emerging economies' slowdown. 

With the limited share of motor vehicle manufacturing in gross value added (highest in euro area is 3% in Germany), it is confident that the VW scandal will have limited macroeconomic impact. 

Furthermore at the micro level, the cost of ownership is very low as a result of low petrol prices, fleet age is quite high (particularly in Italy and Spain), and car producers may react by offering incentives. 

"Low interest rates also support lending for car purchase. Finally the very recent 50% cut in the car purchase tax (to 5%) in China should be a positive factor", says Barclays.