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Customer LoginsSame-Day Analysis: EU passenger car demand grows by 14.3% y/y during February – ACEA
Passenger car registrations in the EU have risen further during February, with registrations up by 14.3% y/y.
IHS Automotive Perspective
- Significance: Passenger car registrations in the EU have grown by 14.3% y/y during February, further lifting the region's YTD performance.
- Implications: The latest data confirms the strong start for the year, albeit benefiting from the additional working day. Demand is being driven by a need to replace and fleet registrations.
- 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 (EU) have risen further during February, according to the latest data released by the European Automobile Manufacturers' Association (ACEA). Demand rose by 14.3% year on year (y/y) to 1,056,902 units. This helped add momentum in the year to date (YTD), with registrations now standing at 2,118,273 units, an increase of 10.1% y/y. In addition, the European Free Trade Agreement (EFTA) area - Iceland, Norway and Switzerland - registrations grew by 6.6% y/y to 35,923 units, helping its YTD to increase by 7.9% y/y to 68,332 units.
On a market basis, the performance of the five largest countries in the EU have in the main reflected the buoyancy in the wider region. Germany, France and Spain have all made double-digit improvements. Registrations in Italy surged 27.3% y/y as the market recovery continues, although sales have also been supported by heavy incentives offered by OEMs there, led by market leader Fiat Chrysler Automobiles (FCA). In comparison, the UK has recorded a relatively weak increase of 8.4% y/y. This is partly related to a long run of gains, and is unlikely to be helped by this typically being one of the weakest months of the year before the biannual age-related number plate change.
Outside this group, strong gains have also been recorded in the majority of 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. More stable markets such as Sweden and Belgium have also recorded double-digit percentage gains. However, the Netherlands has seen a relatively heavy decline of 15.0% 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 remains by far the market leader in the region, although its gains are lower than the market as a whole by 8.0% y/y to 252,629 units. It has been a mixed month on a brand front. The VW brand has increased 4.4% y/y, while Audi and Skoda both outpaced the EU as a whole. However, SEAT's registrations slid by 4.3% y/y, not helped by the weaker sales in its domestic market, Spain. Nevertheless, it should be boosted later this year by the introduction of the new Ateca crossover while other members of the group will also benefit from forthcoming launches during the coming months. Even so, the negative press related to the diesel emissions of its vehicles could well be a factor in its current performance.
Other automakers have recorded even stronger performances. For example, all the brands of PSA Peugeot-Citroën have helped the French company grow by 13.2% y/y to 119,510 units, while Renault Group has risen 10.1% y/y. FCA's sales have surged 22.9% y/y, underpinned by the jump in the Italian market during February, while Ford and General Motors' (GM) Opel Group are not far behind. All three have made gains in market share. Premium automakers also had a positive month, with BMW Group increasing 13.9% y/y, Daimler 21.5% y/y, Volvo up 20.8% y/y and Jaguar Land Rover (JLR) 60.0% y/y, thanks to the Land Rover Discovery Sport and Jaguar XE sales now in full swing.
Outlook and implications
The headline data for the EU during February has confirmed the good start to 2016, although the performance was partly due to calendar benefits of the leap year, with one additional working day. Nevertheless, Carlos Da Silva, manager of IHS Automotive's European light-vehicle sales forecast points out that this compensated for the one less working day observed in January. Even so, there are still no obvious signs of upcoming deceleration, and the gains are underpinned by pent-up demand being released in many markets. He adds that there is an obvious multiplying effect in the Southern markets like Italy, Spain, and Portugal, noting, "Those are the ones that most dearly need their volumes to catch up in order to improve the overall rolling parc situation." Furthermore, Northern European markets are relying more specifically on fleet renewal Da Silva says, be it company car demand or tactical sales through rental fleet and dealer registration activity.
The evidence in the data points to a market that has finally reached a point where customers are confident in the current economic situation in terms of job security, while the risk of their ageing car failing outweighs the cost of replacement. Da Silva also notes that manufacturers are offering very interesting deals, stating, "Incentives are still on the high side, with a particular emphasis on financial deals in many countries - showing that financing is easing somewhat too. Such sales efforts seem to be needed to support the return of customers and, apparently, it does not hurt manufacturers as hard as previously. In fact, in general terms, OEMs profitability has been improving markedly suggesting that said sales efforts can be sustained for a longer period."
This adds up to a fairly positive outlook for the EU's auto market, which explains that we are upgrading our views up until the end of the decade, although this does not mean everything is perfect. Indeed, risks abound in the global economy - notably headwinds in China and the recent shakes on the financial markets - and the situation still looks quite fragile. In Europe, the influx of migrants and the issue of security are still open questions, while the integrity of the EU is at stake due to the forthcoming referendum over UK membership referendum. In addition, activity in the Eurozone remains generally weak. Even so, when factoring in all these elements, positive ones seem to outnumber negative ones, and as Da Silva says, "It has been a long time since this last happened in Europe."
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.