The latest figures from the ACEA show that registrations last month have increased by 6.5% year on year, reaching 1,072,837 units, making it the 14th month in succession that the region has recorded growth. The gains this month have further helped the market's year to date (YTD) figures, which have now surpassed the 10 million unit mark and now stand at 10.65 million units, up 6.1% y/y.

The improvement in October was underpinned by gains in four of the five key markets in the EU whilst many OEMs also recorded gains reflecting the wider market.

Commenting on the outlook and implications of the news, IHS Automotive said that the EU has maintained the robust performance of the passenger car market that was seen last month during October.

Carlos Da Silva, manager for European light-vehicle sales forecast at IHS Automotive, has said that ‘this strengthens the idea that 2014 should end on a positive note for the region overall’ which would be the first time that this has taken place for six years. As expected the market recovery is now taking place using the baseline of the beginning of the year, although as can be seen the rate of improvement is very slow. Da Silva highlights the SAAR trend as evidence of this, stating that the rate in October is around the same level as that seen in late 2008, a point as which many countries were prompted to adopt supportive measures such as scrapping incentives. However, he added: ‘Today these levels are considered as harbingers of better things to come.’

As a result, the improvements are ‘all relative’. While the big picture – ie the global economy and the perspectives it offers now – has changed dramatically since 2008 and 2009, which will be of great comfort to OEMs and suppliers, particularly those in Europe, Da Silva said that this ‘should not distract us, as observers, from the objective reality: the European market is still only in recuperation mode. It is far from cruising at normal speed yet’.

Using Italy as an example: ‘This is a country that, like the region in general, has been doing quite well so far, even if not extraordinarily so. Italy has been through such a strong and long sales trough that car fleet renewal is happening despite a still challenging local economy.’ However, this is only partly true as ‘when looking more in detail, one discovers that the main engine behind Italy’s market recovery is the rental sub-market, not really a rush of private or company car buyers. Rentals have been growing nearly 15% y/y so far this year compared to the 4.2% y/y gain seen in the overall market’.

Also, it is estimated that well over 25% of the market is estimated to be tactical sales – those registered by the rental market, dealers and OEMs. Da Silva stated that this shows that the European recovery is happening in a very delicate context, one that still requires a fair share of artificial support, such as through the rental market and incentives. He ended by saying ‘that it seems the patient is doing better but still cannot do without any medication.’

IHS Automotive currently forecasts that passenger car registrations in EU this year will grow by around 5.2% y/y to a little over 12.5 million units, some 3 million units below the peak years of the last decade. The firm said that while it expects demand to continue to grow for the coming years, by the end of the decade it will still only have reached around 14.3 million units, still over 1 million units below where it once was.