IHS Automotive comments on Western European 10.3% rise in car registrations
This further pulled up the year-to-date (YTD) increase for the first eight months of the year by 8.5% y/y to 10.07 million units. Following August's result, the final adjusted trend-cycle seasonally adjusted annual rate (SAAR) of sales showed its highest level since February 2010 with a figure of 13.4 million units.
German passenger car sales continued to progress with a highly positive development in August with the month recording a 6.2% y/y uplift to 226,314 units, while the year-to-date period returned a 5.6% y/y increase to 2,135,459 units.
The growth in passenger car sales in France grew by 10% y/y to 92,052 units. The gains in August helped lift its YTD to 1,256,670 units, an increase of 5.9% y/y.
Passenger car registrations in Spain grew by 23.3% y/y during August as improvements came from a range of sources with sales rising by 45,355 units to 55,918 units. This has helped it to maintain the rate of growth during the YTD, with an increase of 22.3% y/y to 714,062 units.
Italian passenger car registrations recorded further growth during August, increasing by 10.7% y/y to 59,203 units. While this has been weaker than in some earlier months, the YTD growth held relatively firm with registrations now standing at 1,065,556 units, an increase of 15.0% y/y.
UK passenger car demand grew by a further 9.6% y/y during the typically weak month of August with registrations growing from 72,163 units to 79,060 units. The main driver of the increase last month again was fleet demand, with registrations increasing by 11.8% y/y to 40,184 units. YTD sales for the first eight months rose 6.7% y/y to 1,634,369 units.
Commenting on the outlook and implications, principal analyst Tim Urquhart said: “The German passenger car market continued to develop at a healthy rate in August, which is traditionally the fourth-quietest sales month of the year as a result of the summer holiday period. The sales uplift of 6.2% y/y in August was robust and showed consumer and business confidence remained buoyant, with fleet sales increasing at an accelerated rate. However, there is still much evidence that heavy discounting, incentives, and pre-registering are playing a part in these rises, while OEMs and dealers will also be increasingly concerned about the medium- to longer-term macro-picture, given the recent contraction in the global stock markets caused by the turbulence in China. The macro-threat that loomed earlier in the year, the Greek situation, has calmed down for the time being because of the three-year bailout programme agreed with the country's creditors in mid-August. New model launches in the final quarter will continue to attract buyers into dealers, with the BMW X1, VW Tiguan, and Mercedes-Benz GLC-Class among the notable recent or forthcoming launches, while the revised 3-Series is also a strong plus for BMW. For the full year, IHS Automotive is currently forecasting an increase in the passenger car market of 3.7% y/y to 3.15 million units, indicating a slowdown in the market in the final months of the year.
“In terms of the French market, the economy grew 1% during the first half of 2015 and is expected to continue growing in the remainder of the year. This is not anticipated to be a spectacular improvement, according to IHS. Employment creation will also be limited by structural factors, such as elevated non-wage labour costs and employment protection legislation. Moreover, uncertainty surrounding the situation in Greece may weigh down on business confidence, which could have some impact on activity. Nevertheless, we do expect contagion from Greece to be limited. In all, IHS expect growth to average 1.1% in 2015 and 1.4% in 2016, following 0.2% growth in 2014. As a result we expect French passenger car registrations to increase by over 5.5% y/y to 1.9 million units supported by a better economic cycle and favourable product momentum, particularly from the French brands.
“In Spain, despite the overall low sales number, this is now the 24th month in succession that the Spanish passenger car market has recorded an increase, and is the strongest rate of increase for an August in around 16 years. Once again, private customers have helped to drive gains thanks to the eighth and final round of the Plan Programa de Incentivos al Vehículo Eficiente (PIVE) scrapping scheme, up 18.3% y/y to 37,129 units. However, an even larger gain this month was recorded by the company car category which has increased 38.4% y/y to 17,073 units. The passenger car market appears well on course to break through the 1-million-unit mark this year, something which has not been achieved since 2008. IHS Automotive is now forecasting that registrations will hit almost 1.04 million units by the end of 2015, an increase of over 21% y/y. As well as the various schemes, this will also be underpinned by improvements in the economy, while pressure on domestic spending is abating in line with less acute financial and fiscal tensions, lifting confidence alongside lower inflation easing the squeeze on household real incomes.
“For the Italian passenger car market, this is the eighth month in a row that double-digit gains have been recorded. One of the positive elements during the month has been the contribution of private demand which is up by 13.6% y/y and taking 68.5% of the overall market, although below the growth rate for the first eight months which stands at 16.4% y/y. However, demand for company cars has stagnated this month. However, the local industry association has again called for support to boost the market and replace the current parc of Euro 0, Euro I and Euro II vehicles which are still needing to be scrapped. Indeed, without it could well be slow progress from the fragile, challenging domestic demand conditions in line with the ongoing credit crunch and difficult labour-market. IHS Automotive currently expects that the Italian passenger car market will grow by 8.5% y/y in 2015 to 1.49 million registrations, with further gains anticipated until the end of the decade as the need to replace becomes even more important. Even so, the number of registrations made will be considerably below the previous decade, with little sign that it will be close to returning to these highs in our current forecast visibility.
“In the United Kingdom, August is typically one of the weakest two months of the year along with February. It reflects not only a lull as a result of August being a month that is typically used for vacations, but also the fact that September brings with it an age-related number-plate change as part of the biannual cycle alongside March. Nevertheless, growth remains unabated this month and it is now 42 months in succession for this market. Registrations are being spurred by the relatively buoyant macroeconomic data being recorded, which is boosting confidence among private- and company-car customers.
“Looking forward at the remainder of the year, IHS Automotive is now anticipating UK registrations will reach almost 2.60 million units by the end of 2015, a gain of nearly 5.0% y/y. We also expect that the market will hold firm during 2016, with only a very slight dip in fortunes. However, a steeper fall is expected in 2017. For the full year, IHS Automotive forecasts the combined Western European market will rise at a slightly slower rate than the current rate, with a 5.7% uplift to 12.7 million units.”