Lebanon's car dealers are hoping the automotive sector can buck the slowdown seen across the country's economy, with strong sales in the first quarter building on a year of solid growth in 2007.

According to figures released by Lebanon's Association of Automobile Importers (AAI) in the beginning of April, 5274 new cars were sold in the first three months of 2008, a 69% increase on the 3179 sold during the same period in 2007. Though sales in the second two months were somewhat down on of the 2021 units sold in January, they still averaged more than 1600 units, well above the corresponding months for 2007.

These strong figures continue a trend from 2007, which saw a 23.3% increase in sales over the preceding year, the AAI reported in February. While the total lack of imports in the middle of 2006 due to the conflict with Israel must be factored into last year's increase, the sales figure of 18,687 units was not far short of the record set in 2004, when 19,105 vehicles were driven out of the showrooms.

As was the case in the first quarter of this year, 2007 sales were dominated by smaller and lower-priced vehicles. Just under 50% of all sales were of Japanese-made cars, followed by European cars with 25% of sales and South Korean marques taking third place with 17%.

The shift to smaller models, which are more fuel-efficient and subject to lower sales and registration taxes than more powerful versions, reflects a certain caution on the part of buyers, wary of high prices and running costs.

Pierre Boustany, chief operating officer at BUMC, a dealer in Lebanon, said cost, rather than political or security concerns, remained the main determining factor with car buyers.

"They are still confident to buy cars," Boustany told the local press in February.

One of the big winners in terms of sales last year was Rasamny Younis Motor Co (RYMCO), which saw sales improve by 76%, mainly due to the popularity of its Nissan range. The company also became Lebanon's leading importer of vehicles, accounting for 21.38% of all cars brought into the country last year, according to a report by Blom Bank released in April.

However, despite the confidence of dealers in their clientele, there are some questions as to whether Lebanon's renewed love affair with the automobile will continue at the same pace.

A consumer confidence survey conducted in March reflected concerns over the economy, with the consumer confidence index falling to 69, down from the 81 of February. Any rating below 100 indicates a negative level of confidence among consumers.

According to Ara'a, the firm leading the monthly study, the decline was mainly driven by a fall in current and expected personal income levels. This was followed by increasing commodity prices and the drop in the value of the US dollar, widely used as the country's second currency.

A number of other factors may also impact on new car sales in Lebanon. The continuing downturn in the tourism industry could further hit at rental fleet sales, for example. So too could a slowing down of the economy, with the International Monetary Fund forecasting GDP growth of 2% to 3% for this year, down from the 4% of 2007.

Despite all this, Lebanon's public is still buying new cars in increasing numbers. Even with a slowing growth rate, ongoing political instability and a lack of faith in the immediate future of the economy, sales remain strong, with little sign they will ease down a gear.