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EU passenger car market rises by a modest 2.2% y/y during February – ACEA




Passenger car registrations in the EU have grown by 2.2% y/y during February as working days and other factors come into play.

IHS Markit Perspective:

  • Significance: Passenger car registrations in the EU have grown by 2.2% y/y during February according to ACEA, although the situation is more buoyant in the YTD.
  • Implications: Although working days were a factor during the month, other issues are expected to come into play over the months and years to come.
  • Outlook: For now, IHS Markit sees the passenger car market in the EU growing by around 1% y/y to 14.84 million units, slower than the 6.7% y/y rate recorded during 2016. However, we see the market then starting to slip until at least the end of the decade.

Passenger car registrations in the European Union (EU) have risen more modestly during February, according to the latest data published by European Automobile Manufacturers' Association (Association des Constructeurs Européens d'Automobiles: ACEA). The market has risen 2.2% year on year (y/y) to 1,078,503 units. However, the situation was far more positive in the year to date (YTD), with registration growth for the first two months up 6.2% y/y to 2,248,040 units.

In the European Free Trade Agreement (EFTA) region made up of Iceland, Norway and Switzerland, registrations have been very flat with a gain of just 0.1% y/y to 35,940 units. This contributed to a gain in the YTD of 2.0% y/y to 69,677 units.

The weaker gains in the EU passenger car market have been reflected in the sluggish performance by most of the key markets in the region this month. Small declines have been suffered by the German, French and UK markets, although the latter is traditionally very weak as customers prepare to take advantage of the age-related number plate change the following month. Spain has also put in a weaker performance in February with a gain of just 0.2% y/y, although this suffered from the withdrawal of the scrapping incentive that was in place a year ago, as well as a later Easter which meant rental companies put off adding new vehicles to their fleets. The biggest gain amongst this group has been recorded by the Italian passenger car market, which while weak in some areas continues to be lifted by superammortamento. These are temporary budgetary measures which allow Italian companies and individually owned businesses to account for greater depreciation rates on new vehicles within the existing deductibility limits, which was extended to the end of 2017.

However, larger gains were recorded elsewhere in the region, with markets in central Europe seeing double-digit percentage gains. Similar rates of improvement were also reported by the Netherlands (boosted by a low base of comparison a year ago on tax increases on company cars), Austria and Denmark. Even Sweden, which has put in a record-breaking performance during the past few years continues to cling on to growth in February. Nevertheless, there have been others hit by declines during February, the most notable being Ireland which appears to be being hit by an increase in imports of used cars following the Brexit vote and the weaker pound versus the euro.

From an OEM perspective, it has been a mixed month. Market leading Volkswagen (VW) Group has fallen 1.0% y/y to 247,872 units, as its performance has been dragged back by the VW brand which is down 6.6% y/y to 111,780 units, as it undertakes the transition to the updated Golf and it awaits the launch of the next-generation Polo. Furthermore, Skoda has recorded a flat 0.7% y/y improvement, while Audi is up by a small 2.4% y/y despite the introduction of the Q2 crossover in recent months. The new Ateca crossover has significantly lifted the SEAT brand which has grown 14.5% y/y, and there are further signs of positivity in future with the introduction of the new Ibiza.

Groupe PSA's registrations slid by 3.1% y/y in February to 115,710 units. Although the Citroën brand is up by 1.7% y/y on the back of the latest-generation C3, the Peugeot brand has fallen 3.7% y/y, possibly not helped by restricted supplies of the new 3008 and 5008 on a supplier fire. Nevertheless, PSA's performance this month was just enough to keep it ahead of the Renault Group which registered 112,481 units, a gain of 6.8% y/y. It was buoyed by all its brands; the Renault brand grew 5.0% y/y and Dacia was up by 11.0% y/y.

Although Ford, Opel and premium OEMs BMW Group and Daimler recorded exceptionally weak or declining performances, others put in strong performances. This include FCA Group, which has grown 8.3% y/y thanks to the Fiat (likely to be Tipo) and Alfa Romeo (new Giulia sedan) brands, while Toyota Group has jumped by 20.7% y/y, supported by the newly introduced C-HR crossover.

Outlook and implications

The modest performance in the EU passenger car market in February has partly been down to it having one less working day as a result of February 2016 having an additional day due to the leap year. However, Martin Benecke, manager of IHS Markit's West European light vehicle sales forecast, noted, "The performance shouldn’t be overrated, and the latest signs of the slowdown that we noticed at the end of 2016 are again not confirmed after the first two months of 2017." He added that while the survey data for January and February suggests the Eurozone has started 2017 on a firm footing, IHS Markit is dubious that this can continue "as political uncertainties come to the fore and higher inflation dilutes consumer purchasing power." Benecke also points out that it is highly possible that the Brexit vote could more significantly affect Eurozone activity in 2017 and 2018 as the UK triggers Article 50 of the Lisbon Treaty to kick off the exit negotiations. This is aimed to take place before the end of this month. Other important elements rely on basic assumptions: the macro environment remains mostly supportive with a general recovery, low resources costs, low inflation, low interest rates, job and wage gains, and there are still some pent up demand being released. In the longer term, our outlook will definitely evolve as we integrate further factors. These will include the Trump presidency (including some positive policies like higher spending on US infrastructure and potentially lower taxes) and recent OPEC agreement which can definitely not be ignored.

For now, IHS Markit sees the passenger car market in the EU growing by around 1% y/y to 14.84 million units, slower than the 6.7% y/y rate recorded during 2016. We also anticipate the market slipping back marginally in the years to come, at least until the end of the decade and potentially beyond.

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.

About The Author

Mr. Ian Fletcher serves as a Principal Analyst within IHS Automotive.

He specializes in the British, French, Scandinavian and Southern European markets and has been an automotive industry analyst since 2006. Mr. Fletcher previously worked for Bentley and Jaguar, specializing in chassis technology before joining JATO Dynamics, the automotive research data company. He holds a Bachelor of Engineering (Hons.), in Automotive Engineering from the University of Central England, Birmingham, U.K.​