The French passenger car market has risen by a moderate 2.5% y/y while LCV sales fell during September.
IHS Markit Perspective
Significance: While light-vehicle registrations have grown by 1.6% y/y during September, it has been a mixed month for the individual vehicle categories.
Implications: After recent months of fluctuations due to working day factors, September is perhaps well placed to give us a true picture of the situation in the French light vehicle market without any interference factors.
Outlook: Looking forward to the end of the year, IHS Automotive has changed its forecast for the French market marginally. We anticipate that passenger car registrations this year will grow by just over 5.5% y/y to 2.025 million units, while for LCV registrations up to 6 tonnes, we anticipate an increase of over 7.0% y/y to 406,000 units.
Light-vehicle registrations in France have improved moderately during September, according to the latest data published by the French Automobile Manufacturers' Association (CCFA). During the month, combined passenger car and light commercial vehicle (LCV) registrations reached 204,220 units, a gain of 1.6% year on year (y/y). There was also no benefit from the number of working days this month, at 22. However, gains earlier in 2016 are reflected by an increase of 6.3% y/y during the year to date (YTD), which now stands at 1,802,482 units.
The driver of light-vehicle growth this month has been passenger car registrations. These have grown by 2.5% y/y to 168,827 units. As a result, the growth during the first nine months of the year now stands at 5.7% y/y to 1,502,457 units.
During the month, domestic passenger car manufacturing groups have had a very mixed performance. Renault Group overtook Groupe PSA to be the biggest selling OEM this month, with its registrations increasing by 8.2% y/y to 45,343 units. While the core Renault brand rose 7.1% y/y to 36,777 units, the Dacia brand recorded an even bigger 13.5% y/y improvement. Groupe PSA on the other hand struggled with a decline of 6.8% y/y to 44,833 units as all its brands contracted. The Peugeot brand was its best performer this month but still fell 2.4% y/y to 27,840 units, while the Citroën and DS Automobiles brands have fallen by 13.5% y/y to 14,569 units and 12.2% y/y to 2,424 units, respectively.
Although there was a mixture of performances from other leading OEMs in the country, the overwhelming trend was one of improvement. Leading this pack was Volkswagen (VW) Group which turned around earlier negative performances with an increase of 8.1% y/y to 21,568 units in September. Driving these gains was a 9.5% y/y uplift in VW brand registrations to 12,176 units. It was also helped along by Audi (+14.1% y/y, 5,259 units) and Skoda (+5.3% y/y, 2,252 units), although the SEAT brand slid by 14.9% y/y to 1,399 units. Other improvers included Toyota Group (+9.1% y/y, 6,697 units), Fiat Chrysler Automobiles (FCA; +8.4% y/y, 6,812 units), General Motors (+10.3% y/y, 5,663 units), Kia (+14.0% y/y, 2,829 units) and Hyundai (+17.9% y/y, 2,155 units).
As for premium OEMs, BMW Group was the largest by volume with 7,306 units, but saw a gain of just 0.9% y/y to 7,306 units. However, others saw far bigger improvements with increases at Daimler of 6.9% y/y to 6,311 units and Volvo Cars seeing a jump of 12.2% y/y to 1,246 units.
There were some more negative performances though, with Nissan sliding 6.6% y/y to 6,605 units while Ford fell by 9.9% y/y to 6,112 units.
LCV registrations fell this month by 2.1% y/y to 35,393 units. Nevertheless, its performance in the YTD has held firm with gains of 9.7% y/y to 300,025 units. It has been a mixed month for the local OEMs as while Renault Group was the largest with 12,567 units registered, it suffered a fall of 10.3% y/y to 12,567 units. On the other hand, PSA made a small 1.0% y/y improvement to 11,029 units.
Outlook and implications
After recent months of fluctuations due to working day factors, September is perhaps well placed to give us a true picture of the situation in the French light-vehicle market without any interference factors.
The flatter performance than in earlier months coincides with the latest estimate from the National Institute of Statistics and Economic Studies (Institut national de la statistique et des études économiques: INSEE) which shows French GDP contracting by 0.1% quarter on quarter (q/q) during the second quarter of 2016. This is down from a previous estimate of stagnation. This follows GDP having grown by 0.7% q/q during the first three months of 2016. The revision to the second quarter was mainly driven by a weaker-than-expected performance from private consumption. Household spending, which had originally been estimated to have stagnated during the second quarter, declined by 0.1% q/q. Although survey evidence already available for the third quarter has looked relatively upbeat, hard data have disappointed. Even so, these factors are felt to unlikely have a negative impact on our full year GDP expectations of 1.3%, a marginal increase from 1.2% during 2015.
Nevertheless, fundamentals for consumers remain benign, with households' purchasing power boosted by low inflation and improving wage growth. Moreover, measures put in place in recent times to provide some flexibility in the labour market are seen driving a gradual decline in the unemployment rate, while extremely accommodative monetary policy should also help to support activity. However, we still expect economic activity to be limited by a tough labour market (despite its recent stabilisation) and muted external demand. We also see the aftershocks of the Brexit vote in the UK having a negative impact on the economy, particularly once the British government formally starts EU exit negotiations, via lower demand from the UK and the appreciation of the euro against sterling. Uncertainty surrounding the presidential election in France, scheduled for April and May next year, is also expected to have a negative impact on activity during the first half of 2017. All in all, we see growth decelerating to 0.8% in 2017.
This latest round of sales results also coincides with the opening of the Paris Motor Show to the public this weekend. The situation with regards to local OEMs reflects to some degree the recent product activity at both brands. Although Renault's strategy of replacing and adding new models to its line-up continues to pay dividends, PSA has been much more muted in this area of late. However, it will reverse this trends with the introduction of the Peugeot 3008 and 5008 crossovers and the B-segment Citroën C3 over the coming months, both of which are competitive prospects. Even so, Renault will continue its onslaught with the introduction of the Renault Grand Scenic, Renault Koleos, the longer-range Renault Zoe electric vehicle (EV) and the facelifted Dacia Sandero and Logan.
Looking forward to the end of the year, IHS Automotive has changed its forecast for the French market marginally. We anticipate that passenger car registrations this year will grow by just over 5.5% y/y to 2.025 million units, followed by increases to 2.065 million units during 2017 and 2.09 million units in 2018. As for LCV registrations up to 6 tonnes, we anticipate an increase of over 7.0% y/y to 406,000 units, while in 2017 we expect a further increase to 416,000 units and another marginal improvement in 2018 to 417,000 units.
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The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.