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Customer LoginsGrowth in Italian and Spanish passenger car markets slows in July
Growth in the Italian and Spanish passenger car markets has slowed in July, not helped by the two fewer working days during the month.
IHS Automotive perspective
- Significance: Growth in the Italian and Spanish passenger car markets has slowed in July, with the former growing by 2.9% y/y while the latter is up by 4.3% y/y.
- Implications: These markets have not been helped by the two fewer working days during the month.
- Outlook: Despite the slowdown in July, IHS Automotive anticipates that both markets will remain positive in the second half of the year despite a possible threat from the Brexit vote.
Both the Italian and Spanish passenger car markets have recorded weaker gains during July than those seen in earlier months. This has predominantly been caused by their being only 21 working days versus 23 in July 2015.
Italy
Passenger car registrations in the Italian market have grown by 2.9% year on year (y/y) during July, according to the latest data published by UNRAE. The number registered has reached 136,275 units versus 132,485 units during July 2015. Nevertheless, gains earlier in 2016 are highlighted by the year to date (YTD) which is now up by 17.1% y/y to 1,179,068 units.
Leading the way once again is traditional bestselling brand Fiat, which has recorded registrations of 29,290 units this month, although this was a gain of just 4.3% y/y. Its parent company Fiat Chrysler Automobiles' (FCA) other brands have also recorded gains this month to varying degrees. The Lancia brand has seen a flat performance with sales at 4,487 units while the Jeep brand jumped 18.7% y/y. The Alfa Romeo brand also increased 6.1% y/y to 2,664 units, despite the new D-segment Giulia sedan starting to reach the market.
After FCA, the second biggest selling brand in Italy this month was Volkswagen (VW) in second place. However, it struggled this month with registrations falling by 8.1% y/y to 9,706 units. Third-placed Ford fared better with a gain of 3% y/y to 9,279 units, although the largest gain among the top selling brands this month was Renault which improved by 15.4% y/y to 8,697 units.
Spain
The Spanish passenger car market recorded a gain of 4.3% y/y to 107,306 units during July, according to the latest registrations data published by ANFAC. Nevertheless, earlier gains have helped to achieve a robust 11.0% y/y increase in the YTD to 730,540 units.
Opel resumed its position as the biggest selling brand in Spain during July, as its registrations jumped by 23.2% y/y to 8,089 units. This strong gain was underpinned by a surge in sales for the Corsa, registrations of which more than doubled during the month, as well as the popularity of the Mokka which increased by a third. Furthermore, the Astra also saw a robust improvement. This, and earlier gains have helped it to maintain its position as the leading brand in the YTD, as its registrations now stand at 61,859 units, a gain of 21.8% y/y.
In second place is Renault which has grown in line with the market at 5.5% y/y to 8,017 units as growth by the Captur and Kadjar crossovers offset declines for the Clio and Mégane. SEAT has also put in a stronger performance compared to earlier months, with a gain of 8.9% y/y to 7,659 units to take it to third place as the Ibiza and Leon both had far stronger months, joined by the Ateca crossover. There have been a few struggles at the top of the charts this month, with Groupe PSA brands Peugeot and Citroën both sliding as the VW brand tumbled by 25%.
Outlook and implications
As noted above, the main reason for this weakening has been the two fewer working days in both markets. However, in the Italian market this has already followed a slowing the previous month after a strong start to the year underpinned by heavy incentives and promotional campaigns undertaken by OEMs. The focus on private sales through this initiative has resulted in registrations during this time has meant that there has been some payback for this now. Indeed, July was the first decline during the year of 6% y/y to 86,451 units. Nevertheless, sales to this type of buyer remain up by 17.4% y/y in the YTD according to the trade association. However, other categories were more buoyant, with the rental market growing by 21.9% y/y to 21,856 units, as long-term rentals increased by 13.6% y/y this month while short-term rentals have surged by 57.9% y/y. Furthermore, there has also been a significant improvement in the number of company cars sold, with registrations now standing at 29,060 units, an increase of 21.3% y/y. The economy has been in recovery after exiting recession, it has been helped along by the sharp fall in global crude-oil prices, the slide in the euro, low interest rates, and a round of household and business tax cuts. The return to growth initially received support from strengthening exports and firmer consumer spending intentions, despite the prevailing credit crunch and difficult labour-market conditions. Overall, IHS Markit currently expects the economy to grow 0.9% in 2016 and 0.5% in 2017, following a 0.6% gain in 2015. The balance of risks to the outlook is now tilting to the downside, being led by the damage of the Brexit vote and heightened tensions in the country's banking sector. Even so, there appears to be ongoing support for the recovery, namely even still-low energy costs and a competitive currency, alongside greater emphasis on growth versus austerity in Italy. IHS Automotive expects that the passenger car market will grow by more than 13% y/y during 2016 to 1.79 million units, with gains continuing until the end of the decade.
The run of gains in the Spanish market that lasted two and a half years came to an end in March, due to the seasonal impact of public holidays. However, demand remains ultimately buoyant, continuing to grow from an exceptionally low base of comparison. Indeed, the monthly total for July is the fifth consecutive month in which registrations of over 100,000 units has been achieved. Private demand has grown by 5.4% y/y to 62,767 units during July, perhaps reflecting the eighth round of the PIVE scrapping incentive. However, this round was less generous than previous arrangements and at the beginning of last month, EUR25-million (USD27.9 million)-worth of funding from an initial pot of EUR225 million was available. Even so, some deliveries will take place after orders submitted during July. Gains were also recorded in the company car channel (+3.5% y/y, 29,785 units) and rental fleets to which registrations have increased by 1.2% y/y to 14,754 units. This coincides with further growth in the Spanish market, with the Bank of Spain indicating that improvements have been seen for 12 quarters running by mid-2016. It also notes that both consumer spending and business investment continue to drive the recovery in the second quarter of 2016. There are a wider spectrum of obstacles and the economy is expected to slow more notably during 2017 than previously anticipated as a result of the confused domestic political scene and troubled labour market, with unemployment standing at 21.0% during the first quarter of 2016), while households enduring significant past income and wealth losses. The Brexit vote is also expected to prove to be a factor. Prior to the UK vote, we had assumed growth would remain solid in the near term but would lose momentum in an orderly manner. However, intensified economic and financial risks are set to trigger a sharper slowdown, namely the uncertainty set to engulf the Eurozone and global economies, presenting a further headwind to Spain's recovery momentum. Also, Spain has significant economic, social and, financial ties with the United Kingdom, which will likely deepen the hit and extend the effects into 2018. Therefore, after expanding 1.4% in 2014 and 3.2% in 2015, the economy is projected to grow 2.9% in 2016 and 1.6% (down from 2.35%) in 2017. IHS Automotive has also reduced forecasted growth for the market. While we see an 8.7% y/y increase in passenger car demand during 2016 to 1.12 million units, growth will be a weaker 1.6% y/y to 1.14 million units.
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.