Latest data from the ACEA show that the passenger car market in the European Union recorded a gain of 6.4% year on year in September as registrations reached almost 1.24 million units.

IHS Automotive added that September has seen a welcome solid performance for the passenger car market and while there are many reasons to remain cautious demand will continue to move upwards from this low base on the requirement to renew the region’s fleet.

Commenting on the outlook and implications of the figures, IHS Automotive said that September's solid performance for the passenger car market in the EU was welcome given the slightly weak summer months, exemplified by the SAAR, which is back to more sustainable growth after the expected slowdown mid-year. However, Carlos Da Silva, manager for European light vehicle sales forecast at IHS Automotive said that despite an ongoing message that the region is on a positive path, there are still many reasons to remain cautious.

Points he noted included some artificial support for the region such as a positive calendar effect, the number plate change in the UK and the end-of-quarter push implemented by dealers and OEMs.

Mr Da Silva also said that in terms of volumes sales levels remain historically low, adding, ‘Current SAAR is still below the worth point registered in late 2008 [when the financial crisis started], which has been the case for the past two-and-a-half years or so.’ Current slow sales levels are also being supported by high levels of both direct and indirect incentives, and that even sales of models which have a buzz around them such as Renault's Captur are being bolstered by special editions.

However, Mr Da Silva stated: ‘The main argument in favour of optimism is linked to the renewal cycle: whatever the economy, many markets do need to replace their fleet given the slump in new car demand during past years. This is clearly the reason behind the impressive growth numbers in markets like Portugal, Greece.’

He added: ‘A fleet of cars needs to be roadworthy or it becomes useless – and/or disproportionately costly – and the best way to keep it that way is to have new cars put into the market. That's a leading force behind the recovery of the European market this year but it also explains why the pace is slow: so far said fleet renewal is mostly supported by “need” not by “want”. By definition, this also explains why we do not see the market jumping back to pre-crisis levels: the European market structure has definitely changed!’

IHS Automotive currently forecasts that passenger car registrations this year will grow by around 5.2% y/y, although this will be to a little over 12.5 million units, some 3 million units below the peak years of the previous decade. While the firm expects demand to continue to grow for the coming years thanks to the points Mr Da Silva noted, 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.