In keeping with the global stagnation that has enveloped the auto industry, the latest EU/EFTA vehicle registration data paints an ominous picture to start 2019 in Europe, where passenger car registrations dropped 4.6% year over year and sales declined in all of largest markets in Germany, France, the U.K., Italy and Spain.

Last year, emissions testing was the generic excuse used by most manufacturers to explain the sharp drop in EU auto sales. However, with poor data continuing into 2019, it's becoming clear that the problem is likely to instead be the result of a broader slowdown. Germany's most powerful labor union, IG Metall, predicts that employment in the auto sector will top out in 2019.

Here's how the data looked on a per manufacturer basis:

VW Group sales drop 6.4% y/y; ytd down 6.4%

PSA Group sales drop 2.3% y/y; ytd down 2.3%

Renault Group sales drop 0.9% y/y; ytd down 0.9%

Ford sales drop 6.6% y/y; ytd down 6.6%

FCA Group sales drop 14.9% y/y; ytd down 14.9%

BMW Group sales drop 3.1% y/y; ytd down 3.1%

Daimler sales drop 1.5% y/y; ytd down 1.5%

Toyota Group sales drop 6% y/y; ytd down 6%

Nissan sales drop 24.7% y/y; ytd down 24.7%

And here is a look at the trend of ugly YOY misses that began consistently in September of last year.

Bloomberg Intelligence analyst Michael Dean put it clearly in a note: "The EU auto-demand cycle has peaked."

Spain saw the largest decline in registrations, down 8%. Italy followed, down 7.5%. Both Audi and Porsche saw double digit percentage declines, as VW Group sales were down 6.4%.

Brexit continues to be a major point of volatility for many of these manufacturers. Renault and Ford have both warned that unless the U.K. leaves Europe with a deal, both companies could miss estimates and that the effects could be "catastrophic".

But the biggest risk for European car makers has yet to emerge: on Monday, the US Commerce Department is expected to issue a report outlining that car imports into the US pose a national security threat, and then suggest ways for US president Donald Trump to restrict these imports through high tariffs and quotas. From there, Trump has 90 days to make a decision.

Trump has said in the past he would consider a 25% tariff on car imports. That’s the same figure levied on steel imports, which were also deemed a national security threat last year.

“The Commerce Department recommendation will probably follow how the steel recommendation came out,” said Robert Martin, a leading US economist at UBS who previously advised the Bush administration on trade policy. A tariff of 25% is “their go-to number,” he told Yahoo Finance UK.

The US imports nearly $200bn (£156bn) worth of new cars each year, with the vast majority coming from Mexico, Canada, Japan and the European Union. Within Europe, Germany is the top exporter to the US and has the most to lose, followed by the UK and Italy, according to Justin Cox, a director at LMC Automotive. Germany alone exports over $20bn worth of cars to the US each year, or about 15% of its total exports to the country.

Naturally, the European Automobile Manufacturers’ Association said it opposed the introduction of any new US tariffs. "Our industry thrives best in an environment without trade barriers. Any trade-restrictive measures in the auto sector will have a serious negative impact on the EU, the US and global economies," a spokesperson said in a statement.

The industry association noted that European car companies have US-based factories that support hundreds of thousands of American workers, building cars that are exported globally. European-owned car factories in the US account for 26% of the country’s auto production.

* * *

Leading the global malaise in the auto market has been China, which is set to report January sales numbers this coming Monday. That report should give clarity as to whether or not China has turned the corner, or is continuing at the anemic pace with which it ended 2018. The automobile industry in China has been crippled, partly as a result of the trade war, partly due to the ongoing domestic economic slowdown in the mainland, and absent major subsidies - which don't appear to be coming - the outlook for 2019 continues to not look promising.