Passenger car registrations in the European Union have continued to grow during the opening month of 2016, according to the latest data released by ACEA.
IHS Automotive Perspective
Significance
European Union passenger car registrations have grown by 6.2% y/y during January
Implications
Although the rate of growth is slightly weaker than at the close of 2015, there is little to suggest that the rate is easing at the moment.
Outlook
At present, IHS Automotive anticipates EU sales to reach almost 14 million units during 2016, a gain of around 2% y/y. Although we may consider upgrading our forecast in the coming months depending on the multitude of factors that could have an influence on its performance.
Passenger car registrations in the European Union have continued to grow during the opening month of 2016. According to the latest data released by the European Automobile Manufacturers' Association (ACEA), registrations during January have grown by 6.2% year on year (y/y) to 1,061,150 units. In addition, in the European Free Trade Association (EFTA) area – comprising Iceland, Liechtenstein, Norway and Switzerland – registrations grew by 9.5% y/y to 32,415 units.
On a market basis, all of the top-five largest markets in the region have recorded gains in January. However, while Germany, France, and the United Kingdom saw relatively moderate improvements, with gains behind that seen by the region as a whole, the Spanish and Italian markets, which are continuing to recover from the depths that they hit during the height of the economic crisis, recorded far stronger improvements. However, data from their respective local associations have shown that the types of customer underpinning this were different, with Spain benefiting from company car and rental demand for the forthcoming holiday season, and a large part of the improvement in Italy stemming from private consumers returning to the market, attracted by dealers' incentives.
Outside this group, strong gains have also been recorded in some markets. Ireland, Portugal, and a host of markets in Central Europe are continuing to record improvements following the Eurozone economic downturn and the low base of comparison. However, the Netherlands has seen a relatively heavy decline of 14.4% y/y as it was hit by a tax change that has taken place in the market.
From an OEM perspective, the Volkswagen (VW) Group saw a relatively marginal improvement in the EU this month with an increase of 0.8% y/y, although it remained easily the largest automaker at 256,989 units. Its performance was dragged down by the VW brand, which slid by 3.8% y/y to 124,149 units. Although the negative press related to the diesel emissions of its vehicles could well be a factor in this, it is unlikely to be helped by the age of some of its key models such as the Polo, Golf, and the soon-to-be-replaced Tiguan. However, the group was also hampered by a slowdown in registrations for the SEAT and Porsche brands. Nevertheless, a 13.7% y/y surge recorded by Audi has helped matters, alongside smaller gains seen by Skoda. Elsewhere, PSA Peugeot-Citroën and Renault Group also made gains behind that of the market as a whole, although more significant increases were seen elsewhere. This included Ford (+11.4% y/y), Fiat Chrysler Automobiles (FCA; +14.4% y/y), and General Motors' (GM) Opel Group (+12.2% y/y), helping all three to make gains in market share. Premium automakers also had a decent month, with BMW Group seeing an increase of 4.0% y/y, Daimler 8.5% y/y, and Jaguar Land Rover (JLR) 53.8% y/y, thanks to the Land Rover Discovery Sport and Jaguar XE sales now in full swing.
Outlook and implications
While the gain in January comes as no surprise, the weaker rate at which this is taking place is nothing to be concerned about, according to Carlos Da Silva, manager of IHS Automotive's European light-vehicle sales forecast. He notes that one of the reasons for this is the negative calendar effect in many markets where one fewer day was recorded compared to January 2015. In addition, the fourth quarter of 2015 was particularly strong, which may have distorted comparisons. Indeed, it should be noted that, for many countries, January 2015's results were simply among the best for the month of January since 2008.
Da Silva says that the European market's recovery continues to be driven by two factors. One is mostly evident in the southern European markets, which suffered immensely during the crisis and are now in "catch-up" mode. In these markets, private demand is proving strong as customers are finally getting around to renewing older cars, while corporate demand is showing signs of take-off. The second factor is mostly witnessed in the northern European markets. Comparatively, these have been faring better for a longer time and as such are not posting such impressive growth rates. Additionally, they are currently mostly supported by the fleet component of the market. Indeed, given the improving macroeconomic and confidence conditions, companies are now ready to replace their vehicles. However, on another level, the rate at which rental, dealer, and OEM self-registered cars are increasing does not seem to be showing any signs of abatement either.
Looking forward to the rest of the year, Da Silva says that, while the month of January does not represent 2016 as a whole, it shows that there has been no disruption in the current trend and that the impressive momentum of 2015 may well be valid in 2016. Nevertheless, IHS Automotive is maintaining a cautious approach to its forecasts due to global and local factors. In the former category, headwinds in China and the recent conditions in the financial markets are two factors that may cause an impact, while in Europe the influx of migrants and security in the region, as well as the possibility of the UK's exit from the EU, are also potential challenges for the market. As a result, despite the relative improvement in general conditions − along with the benefits that European consumers are seeing in lower oil prices, low levels of inflation, and improved employment rates − the landscape remains still quite blurred.
At present, IHS Automotive anticipates EU sales will reach almost 14 million units during 2016, a gain of around 2% y/y. However, we may consider upgrading our forecast in the coming months to take into account the level of pent-up demand still to be released and coming faster than expected.
About this article
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.