Figures have shown an average rise in sales of 5.5% per month for the five months to January 2014, with Spain rising 20.3% per month aided by a scrappage scheme due to run until the end of this year. On the back of increased consumer and industrial confidence, Dean Bowkett, technical director and chief editor, is predicting 2014 new car sales could be 3-4% higher than in 2013.

Yet 2013 was also the worst year for car sales since the Exchange Rate Mechanism crisis period of 1993, adjusted for new Member States, with 2012 the second worst year on ACEA records, Bowkett noted. Sales of new vehicles were down 1.8% for the full year, though December was up by 13% on 2012 levels and only 100,000 units short of the pre-crisis average.

Buyer habits are also changing, with traditional volume brands Citroen, Peugeot and Volkswagen suffering the market’s largest declines – at 10.5%, 6.7% and 3.7% respectively – during 2013. At the other end of the table, Dacia grew 22.8%, new products helped SEAT and Skoda to grow by 11% and 3.7% respectively. Mercedes-Benz was the third-largest grower, at 5.2% over 2012.

But the outlook is positive. Recovery of the Spanish and Italian markets and growth in Russia is predicted to allow manufacturers to register their entire capacity without reducing production volumes and EurotaxGlass’s is predicting plant closures are unlikely between now and 2017 as registration volumes rise. 

Looking forward, the company expects volumes of left-hand drive stock less than five years old to fall between now and 2017 as a result of depressed new sales, creating shortages which will improve residual values.

The UK market is the exception to the rule, with heavy discounting, pushed sales and political changes expected to reduce residual values between 0.5% and 1% per annum for the next two to three years as volumes increase and the political landscape changes.

Discounting is now commonplace across Europe, which has helped stimulate new car sales but with a knock-on effect on the youngest used vehicle stock. However, Bowkett added that this is such a popular practice that values are beginning to flatten out.

Older vehicles are still affected by the after-effects of the financial crisis. Delayed returns and reduced new orders in the leasing market has left limited stock of 36-month old stock, which has had a positive effect on residual values across the region. Particularly in Spain and Italy, where demand is recovering more quickly than stock.

The strongest performers in this age bracket are city cars and large executive models, though Bowkett noted that SUVs and crossovers are outperforming the traditional hatchback, saloon and estate variants across the region, with higher residual values and stronger demand.

‘Any growth in new car sales has to consider how far Europe has fallen,’ said Bowkett. ‘Whilst the average new car sales volume for the EU28 (adjusted) from the start of this century up to the end of 2007 was 15.5m cars a year, even by 2017 we are unlikely to be much closer than 90% of that level.’