According to the latest data published by the French Automobile Manufacturers' Association (Comité des Constructeurs Français d'Automobiles: CCFA), registrations of passenger cars and light commercial vehicles (LCVs) reached 181,176 units during the month, an improvement of 10.1% year on year (y/y). However, the rate of growth was lifted by an additional working day this month, with 20 days under consideration versus 19 days during November 2014. With this taken into account, the growth rate falls to 4.6% y/y. Nevertheless, the latest gains have further benefited year to date (YTD) growth, which now stands at 5.3% y/y as the total registrations for the market over the 11 months hit 2,073,061 units.

The growth in the light-vehicle category last month was driven by the passenger car segment. Registrations of such vehicles have grown by 11.3% y/y to 150,339 units, although taking into account the additional working day this month, this falls to 5.7% y/y. The gain this month has also helped the passenger car segment in the YTD, and now stands at 1,733,511 units, an increase of 6.2% y/y.

Ian Fletcher, principal analyst at IHS Automotive, said the rise “appears to underline the continuing normalisation process that is taking place after the swings caused by the challenging economic situation in Europe”.

He added: “On the macroeconomic front, France's economy grew 1.1% during the first three quarters of 2015 and this is expected to continue for the remainder of the year and into 2016, boosted by muted inflation, a weak euro, extremely loose monetary conditions, improving confidence levels, and gradually easing credit conditions. However, the economy is still facing many headwinds that will limit the recovery over the medium term. In particular, the labour-market situation will remain difficult, although some stabilisation is expected. Growth will not be strong enough to make a significant dent in France's elevated unemployment rate though. Employment creation will also be limited by structural factors, such as elevated non-wage labour costs and employment protection legislation. However, the government has suggested that some reforms in this area may take place in 2016 which is likely to be welcomed. During the same year, it has also indicated that it will look to cut taxes in 2016 without compromising the fiscal reduction target for the year. This will include income tax reductions amounting to EUR5 billion which it is said will help 12 million households. The social solidarity contribution (contribution sociale de solidarité des sociétés: C3S), currently paid by around 300,000 companies, is projected to be eliminated in 2017. All in all, measures aimed at helping businesses will total EUR33 billion in 2016. In all, IHS expects growth to average 1.1% in 2015 and 1.3% in 2016, following 0.2% growth in 2014.”

“The dynamic of the passenger car market is undergoing something of a transition as the French government puts even greater pressure on phasing out the benefits for buying a car with a diesel powertrain. According to data published by trade association CCFA, the proportion of total diesel passenger car sales in the YTD has fallen to 57.5% of the market compared to 64.2% in 2014, while gasoline (petrol) passenger car registrations have increased from 32.7% to 38.3%. There has also been an increase in share of hybrid and electric vehicles (EVs). The pressure will further ratchet up as the French government improves the parity between the two key fuel types by changing the tax applied to them. The negative press related to VW and the fuel-type in general, noted above, has added to the pressures on diesel powertrains.”

“Overall, IHS Automotive anticipates improvements in light-vehicle sales during 2015. We expect passenger car registrations in France to increase by around 6% y/y to 1.9 million units supported by a better economic cycle and favourable product momentum, particularly from the French brands. We also currently expect LCV demand to grow by under 1.0% y/y during 2015 to over 374,000 units. This will still leave both these categories below the pre-crisis average, and although further improvements will come, it could be a few more years before earlier levels are regained.”