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Customer LoginsFrench light-vehicle demand surges on seasonal factors in May
The French light-vehicle market has surged during May due to a low base of comparison caused by seasonal factors a year ago.
IHS Automotive Perspective
- Significance: Light-vehicle registrations in France have jumped during May with passenger cars up by 22.3% y/y and LCVs growing by 23.1% y/y.
- Implications: The improvement has come about through an exceptionally high number of public holidays during May 2015, which resulted in a low base of comparison.
- Outlook: IHS Automotive anticipates improvements in light-vehicle sales during 2016. We currently expect passenger car registrations to increase by almost 6% y/y to nearly 2.03 million and LCV demand to grow by around 7% y/y to 405,500 units during 2016.
Registrations in the French light-vehicle market have jumped during May. According to data published by the French Automobile Manufacturers' Association (CCFA), the number of passenger cars and light commercial vehicles (LCVs) registered during the month grew by 23.1% year on year (y/y) to 210,113 units. This has been as a result of a low base of comparison during the same month a year ago, underlined by the number of working days which stood at 20 versus 17 during May 2015. When taking this into account, the growth rate this month stands at just 4.7% y/y. Nevertheless, as a result of the strong month, this category has built up a significant margin in the year to date (YTD), with registrations for the five months now standing at 1,045,589 units, an increase of 10.8% y/y.
Much of the gains recorded this month have stemmed from the large passenger car category, which made up over 80% of the light vehicle market. Here registrations have grown by 22.3% y/y to 175,834 units, although once the additional working days are taken in to account, this growth rate falls to 4.0% y/y.
In line with the significant growth seen this month by the passenger car market, both key domestic OEMs' registrations surged. Groupe PSA was the biggest automaker during the month with 51,911 units registered, an increase of 25.6% y/y. Unsurprisingly, all its brands contributed to this improvement, although while the Peugeot brand remained the most important with 30,994 units registered, its rise was the smallest, at 23.1% y/y. By contrast, the Citroën brand expanded by 30.0% y/y to 18,540 units, while DS Automobiles gained by 25.6% y/y to 2,377 units. Renault Group had an even bigger month, with its registrations having jumped by 34.0% y/y to 43,717 units, with its namesake brand being lifted by 32.6% y/y to 34,260 units, while its low-cost Dacia brand leapt by 39.3% y/y to 9,457 units.
Although the general trend among non-domestic OEMs was growth, this did not mean that everyone benefited from the unique situation this month. Indeed, Volkswagen (VW) Group was one of these, with its registration growth 11 percentage points behind the passenger car market as a whole. Although the Audi and Skoda brands gained in line with the market, the key VW brand increased by just 7.6% y/y. However, SEAT suffered even worse with a fall of 9.5% y/y reported. Joining it with growth behind the wider market rate is Nissan (+5.2% y/y), General Motors (GM; +2.3% y/y), Ford (-1.3% y/y) and Daimler (+6.0% y/y). Daimler contrasted with the strong performance of other premium automakers. As well as Audi (see above), the BMW Group increased 24.3% y/y as Volvo Cars gained by 27.1% y/y. Other OEMs to benefit from this uplift include Toyota (+25.0% y/y), Fiat Chrysler Automobiles (FCA; +28.2% y/y), Hyundai (+57.7% y/y) and Kia (+41.2% y/y).
For LCVs with a gross vehicle weight of up to 5.0 tonnes, the rate of improvement has been even better. The CCFA data shows a gain in registrations of 27.7% y/y to 34,279 units, although when taking into account the additional working days, this falls to 8.5% y/y. In the YTD, LCV registrations now stand at 170,510 units, an increase of 12.5% y/y. During the month, both domestic OEMs have taken advantage of this increase, with PSA up 39.3% y/y to 10,562 units although Renault increased by 17.0% y/y to 10,342 units.
Outlook and implications
The relatively surging rate of growth recorded this month by the light vehicle market can be put down to seasonality which resulted in a large number of public holidays during May 2015. As well as the number of standard working days compared to May 2016 down from 22 days to 21 days, there was also the loss of two public holidays that were given last year as they fell on a weekend in 2016.
Nevertheless, even when taking this into account, registration growth remains on an upward trend, albeit weaker than in some earlier months. This is likely to be partly underpinned by a combination of new model launches, deal-making and the growth in the economic situation. However, the rate of GDP improvement is expected to remain muted after the increase of 1.2% during 2015. IHS expects growth to accelerate but remain unspectacular, with an increase of 1.4% in 2016 and on to 1.5% in 2017. Activity will be supported by muted inflation, a competitive euro, loose monetary conditions, improving confidence levels, and gradually easing credit conditions. However, the recovery still faces many headwinds that will limit it through the medium term. In particular, the labour-market situation will remain difficult and unemployment will remain high, although some stabilisation is expected during 2016. The growth will not be strong enough to make a significant dent in France's elevated unemployment rate despite measures implemented by the government in early 2016 aimed to boost employment. Job creation will also be limited by structural factors, such as elevated nonwage labour costs and employment protection legislation, although labour reforms passed by the government will help boost employment through the medium term even if it is beset by unrest because of the changes in the meantime.
Overall, IHS Automotive anticipates improvements in light-vehicle sales during 2016. We currently expect passenger car registrations to increase by almost 6% y/y to nearly 2.03 million and LCV demand to grow by around 7% y/y to 405,500 units during 2016. This will bring these categories back closer to the levels recorded during pre-crisis times, although it is unlikely to be until the next year or so that normality is achieved.
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.