The latest April data shows that the overall sales trend is up with the latest SAAR rate forecast at 13.03 million units, which is the first time the rate has climbed over 13 million units since March 2011. This is due to ongoing recovery in southern Europe and robust growth being posted in Germany and the UK as the market continues to show signs of a concerted recovery. 

In response IHS Automotive principal analyst, Tim Urquhart said: “The market in Western Europe has continued to respond positively to the improvement in confidence and macroeconomic indicators across the region although there are still significant risks and the ongoing worrying situation regarding the prospect of a Greek default has the potential to cause a significant reverse and have the geopolitical crises in Ukraine and the Middle East.

“However, the German economy's ongoing high degree of international competitiveness and persistently robust consumer demand means the passenger car market is showing steady and consistent growth In addition to these positive economic factors, passenger car demand in Germany will also continue to be fuelled by high levels of discounting and incentives as OEMs jockey for position and volumes.

“New models will also help lift the market. This has already been apparent with the launches of the heavily updated Opel Corsa and new Volkswagen (VW) Passat and Mercedes C-Class. More are coming, including the new Audi A4 and second-generation VW Tiguan. Forthcoming revisions to the BMW 3-Series range should also boost this perennial favourite's popularity as it competes against newly replaced rival models. For the full year 2015, IHS Automotive sees passenger car sales in Germany rising by 3.3% y/y to 3.14 million units, which implies a slowdown from the current rate of growth over the rest of the year.

“After closing the end of the first quarter with a strong performance, the French market has returned to slower rates of growth in April. In March this is likely to have been down to dealers making a push to meet sales targets though, and the current levels are likely to be a new normal. Indeed, from an economic perspective, while IHS expects France to benefit from lower inflation and a weaker euro, boosting activity during the first half of 2015, growth overall is expected to be modest for the year as a whole as the economy remains under pressure.

“Private consumption, France's traditional growth engine, will be hit by weak nominal wage growth, although low inflation helped by a reduced oil price should help to sustain households' purchasing power. However, we expect passenger car registrations increasing by over 2.5% y/y to 1.85 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 just under 3.5% y/y during 2015 to around 384,600 units. This would still leave both these categories below the pre-crisis average, and although further improvements will come, it could be several more years before normality returns.

“While Spain managed to record its 20th consecutive monthly increase in April the market was far more sluggish than the double digit percentage improvements seen as recently as a month ago. The main reason for this has been the exhaustion of the seventh round of the Programa de Incentivos al Vehículo Eficiente (PIVE) scrapping incentive. Nevertheless, registrations to private customers – the focal point of this initiative – has still grown by 18.8% y/y to 43,486 units, although a lower rate than in the previous quarter.

“Company car registrations have also made a strong 34.9% y/y improvement in April, although registrations to rental car dropped 38.5% y/y to 16,347 units. The expectations for private demand of new vehicles would have been much lower were it not for the incentives and attractive financing packages and it remains to be seen whether the government will choose to extend these incentives. At present, IHS Automotive expects demand to grow in 2015 by around 13.0% y/y to 966,000. And we also expect gains to continue until at least the end of the decade, with the 1-million-unit mark breached in 2017. Nevertheless, sales remain below the peaks over the past decade and seem unlikely to reach those levels again, as the market finds a naturally lower plateau.

“For Italy, this is the latest in a string of double-digit percentage gains since the beginning of 2015. In earlier months though, the rental market has taken some of the leadership but there is some indication that private demand is also coming back as well. Indeed, orders this month have reached 158,000, up 31% y/y, and more than the 20% y/y increase recorded in the first quarter of the year.

“This could be underpinned by the slow improvements in the economy and a general need to replace existing vehicles. However, trade associations in the country have also called on the government to implement similar incentives similar to those which have been so successful in Spain. IHS Automotive currently expects that the Italian passenger car market will grow by over 5.5% y/y in 2015 to 1.45 million registrations, with an even larger gain anticipated in 2016 that will continue until the end of the decade.

“This is now the 38th month in succession that passenger car registrations have grown in the UK as it continues its record-breaking run. The latest improvement follows on from the gains in what is typically one of the two peak selling months of the year and in which over 490,000 units were sold, around 20% of the yearly total. The continued gains come as a result of a range of factors that have helped lift the market in recent months. Despite an appreciable slowdown in GDP during the first quarter of the year, consumer confidence remains buoyant with the highest levels since 2002 having been recorded in April. Supportive of this has been OEMs and dealers which have been involved in significant deal-making in recent times through leasing offers and other incentives which are maintaining momentum of the market.”

IHS added: “As a result of higher increases in the first quarter of the year than initially anticipated, IHS Automotive is now anticipating registrations of 2.56 million units by the end of 2015, a gain of over 3% y/y. We are also looking at an around 3.0% y/y fall the following year back to 2.47 million units and further decline beyond that as it settles at a lower level. In the overall region we are foreseeing a slower growth rate we have seen so far this year. As a result IHS forecasts an uplift of 4% to 12.6 million units.”