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Customer LoginsSame-Day Analysis: Western European car market rises 8.9% in 2015, finishes year strongly with 14.9% uplift in December – forecast
According to the latest IHS Automotive Western European forecast, the Western European passenger car market finished 2015 very strongly indeed although a slowdown in growth is expected for 2016.
IHS Automotive perspective
- Significance: The Western European passenger car market has ended 2015 extremely strongly with an increase of 14.9% y/y in December to 1,059,762 units. This helped the full-year figure rise by 8.9% y/y to 13.2 million units.
- Implications: The December sales figures were influenced by strong incentives and discounting and strong replacement demand in certain key markets, while strong fleet market performance has also been a key factor in 2015.
- Outlook: For the full year the European market slightly outperformed IHS Automotive's forecast of 13.1 million units, this was partly because extremely strong December sales that were recorded. However for 2016 IHS is forecasting a more modest uplift of 1.5 y/y to 13.4 million units.
The Western European passenger car market posted a strong rate of growth rate for the full year 2015, with sales rising by 8.9% year on year (y/y) to 13.2 million units. This was backed by a very accelerated growth rate in December as OEMs and dealers moved to offer discounts and incentives in order to hit sales targets, with sales rising by 14.9% y/y to 1,059,762 units. The final trend-cycle seasonally adjusted annual rate (SAAR) rose to 13.7 million units which is the highest rate in six years.
The German passenger car market posted a robust result for the full year 2015, with the year-end sales numbers showing a 5.6% y/y rise for the 12 months. Sales finished the year at 3,206,042 units, around 170,000 units higher than last year.
In France passenger car registrations grew by 6.8% y/y to 1,917,230 units, which was helped along by a gain during December of 12.5% y/y to 183,724 units.
Spanish passenger car demand has increased 20.9% y/y during 2015. This growth has come through much of the year, with December contributing 88,609 units, a gain of 20.7% y/y.
The Italian passenger car market has also risen strongly during 2015. According to the latest data published by trade association UNRAE, registrations have grown by 15.8% y/y to 1,574,872 units. Its growth rate has been supported by a gain during December of 18.7% y/y to 109,395 units.
In the UK, passenger car registrations have reached record levels during 2015. Demand has reached 2,633,503 units, an increase of 6.3% y/y, which was supported in December by a gain of 8.4% y/y to 180,077 units.
Outlook and implications
In terms of the big-five Western European markets, Germany posted a robust performance in 2015 with a full-year uplift of 5.6% to 3.21 million units, very close to IHS Automotive's final forecast for the market of 3.19 million units. Although this was an impressive rise in the context of some external factors influencing the market, it remains over 600,000 units short of the previous high recorded with the assistance of the successful scrappage scheme in 2009. Overall, this result was underpinned by the ongoing stability and relatively strong development of the German economy. Indeed in recent weeks and months there have been signs that it is accelerating again, overcoming a mid-2014 growth pause to grow at a good 0.4% quarter on quarter (q/q) on average, or nearly 2.0% annualised, during the last four quarters. Our December 2015 forecast predicts GDP growth, following 1.6% in 2014, at 1.5% in 2015 and 2.0% in 2016. For 2016, IHS Automotive is offering a conservative forecast of a small 1.5% uplift to 3.25 million units.
In France, registration figures during 2015 have been helped by the use of tactical sales - registrations by OEMs, dealers and rental fleets - which has helped matters. This is likely to have happened in December again as dealers looked to meet annual sales targets by pre-registering some vehicles. Nevertheless, some of the large gains in December 2015 are also likely to have come from new models. Renault is likely to have been a big beneficiary in this area thanks to the introduction of the Espace, Kadjar and Talisman. It could also be lifted by the first of the fourth-generation Méganes that are now hitting the market. This is likely to carry the automaker during 2016 as well. Nevertheless, the recovery still faces many headwinds that will limit the recovery over the medium term. In particular, the labour-market situation will remain difficult, and growth will not be strong enough to make a significant dent in France's elevated unemployment rate. IHS expects growth to average 1.2% in 2016 after an increase of 0.2% during 2014 and an anticipated increase of 1.1% in 2015. Overall, IHS Automotive anticipates improvements in light-vehicle sales during 2016. We currently expect passenger car registrations to increase by over 3.5% y/y during 2016.
As well as December 2015 being the 28th month in succession that the Spanish market has recorded growth, this year has been the first time since 2008 that registrations have hit 1 million units. Part of the reason for this has been the benefits that continue to be offered by the Plan Programa de Incentivos al Vehículo Eficiente (PIVE) scrapping scheme which is now in its eighth and final round. This - as well as improved consumer confidence - has helped private demand to be a huge driver to the market in recent years and 2015 has been no different with an increase to 18.8% y/y to 574,575 units. However, the improved economic climate has also helped demand from businesses for company cars to come to the fore. During 2015, registrations of such vehicles have grown by 30.9% y/y to 283,096 units. Demand from rental fleets has also increased but at a more muted rate. Nevertheless, this still rose 13.7% y/y to 176,561 units in 2015. Although GDP growth is expected to be 2.7% in 2016 after a decline in 2014 of 1.4% followed by an anticipated gain of 3.2% in 2015 according to IHS supported by the benefits of a weaker euro and lower oil prices, the labour market remains troubled, with an unemployment rate of 21.2% during the third quarter of 2015 and this expected to fall to 20.8% during 2016. Looking towards 2016, IHS Automotive anticipates that growth of the passenger car market will continue, with sales up by a more moderate 7.5% y/y as the recovery continues, and increases are expected at least until the end of the decade.
There has been no key incentive from the government supporting growth during 2015 for the Italian passenger car market. The recovery of private demand has been key to achieving the accelerated growth, and over the course of this year registrations by this type of customer were seen by UNRAE to have grown by around 18% y/y to take a share of around 63.7% of the market. Looking towards 2016, IHS Automotive anticipates that growth of the passenger car market will continue, with sales up by a more moderate 7.5% y/y as the recovery continues, and increases are expected at least until the end of the decade. Nevertheless, the improvement comes in a market which is at an exceptionally low ebb and returning economic growth faces ongoing headwinds from fragile, challenging domestic demand conditions in line with the ongoing credit crunch and difficult labour-market conditions. This will result in the market remaining well below earlier sales levels and UNRAE has again raised concerns about the replacement rates of vehicles on the country's roads.
In the UK, the fourth year of annual growth has led to the highest passenger car registrations ever, breaking a record which has stood since 2003. What is perhaps more impressive is that this is an increase of more than one-third since a recent low of 1.94 million units in 2011. This growth has gone hand in hand with the renewed buoyancy of the economy and the improvements in confidence after the market slid in the wake of global economic downturn and the repercussions from this. Indeed, this continued in 2015, with IHS recording GDP growth of 0.4% q/q during the third quarter of 201, after a 0.7% q/q gain in the second and 0.4% q/q during the first. This put GDP growth on course to reach 2.4% during 2015, although slightly down from the 2.9% rise in 2014, but still above the 2.2% increase during 2013 and 1.2% during 2012. After the substantial growth recorded during 2015, IHS Automotive is anticipating that UK registration growth will be more muted during 2016 at around 1.5% y/y. While this will be another record breaking year for the market, we believe it has reached the top of its cycle and will start to decline in 2017, but standing at 2.45 million units by the end of the decade.
Going forward into 2016 in terms of the combined Western European market we see a more modest increase in growth, with the spectre of various macroeconomic and geopolitical scenarios having the ability to limit growth, not least the slowdown in China and growing instability in the middle-east. IHS Automotive currently forecasts a 1.5% rise in sales to 13.4 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.