Data for May shows that the market managed to maintain positive growth in May despite a negative calendar effect of two sales days across the region with a 0.1% y/y increase to 1,059,941 units. This was a strong result given the calendar effect and would have left the market rising by around 8% without the negative calendar effect, the company added. This followed from the accelerated 10.9% increase in March and a 6.7% rise in April. The ongoing robust despite calendar effect resulted in the final seasonally adjusted annual rate (SAAR) remaining on the upward trend posting a figure of 12.977 million units in May.

In Germany, IHS said that the effect was such on May's sales that it pushed the market – which has hitherto been performing strongly in 2015 – into negative territory. However when the calendar adjustment was taken into account the overall increase was down to 1.4%, which was a significant slowdown on the YTD rise of 6.4% y/y in the first four months of the year and possibly points to a trend of slowing growth in the second half. However, the labour market remains strong, with rising wage development, as does consumer and business confidence. Low interest rates and oil prices should also feed into backing consumer confidence in the coming months with regards to the ability to make new car purchases. New model launches such as the new Opel Astra and facelifted BMW 3-Series should help as well. The market is likely to track the second half of 2014 relatively closely given the company’s full-year forecast for the German passenger car market rising by 3.1% y/y to 2.97 million units.

In France the market could also be settling down to a new normal, according to the company. From an economic perspective, following a strong first quarter, activity is expected to moderate over the coming quarters. Provisional figures show the French economy grew 0.6% quarter on quarter (q/q). The main engine of this growth was private consumption, while business investment also rose markedly. Although the economy is expected to continue growing in the remainder of the year, boosted by muted inflation, a weak euro, extremely loose monetary conditions, improving confidence levels, and gradually easing credit conditions, the economy is still facing many headwinds. In all, IHS expects growth to average 1.2% in 2015 and 1.5% in 2014. Overall, IHS Automotive anticipates improvements in light-vehicle sales during 2015. It expects passenger car registrations to increase by over 2.5% y/y to 1.845 million units supported by a better economic cycle and favourable product momentum, particularly from the French brands.

It is now the 21st month in succession that the Spanish passenger car market has recorded growth. The upswing of the performance of the market has also coincided with the Spanish government announcing the extension of the PIVE scheme for an eighth and now final round. The decision to extend the scrapping incentive has led IHS Automotive to forecast that passenger car sales will rise over the one million unit mark during 2015. Even so, unemployment remains at elevated levels while household disposable incomes continue to be squeezed, and while IHS currently expect real incomes to begin recovering from 2015, helped by marginal inflation developments and income tax cuts, this is at risk from nominal wage growth compression triggered by recent labour market reforms and poor labour market conditions.

This is the fifth month of succession of double-digit percentage gains in the Italian passenger car market, however there has certainly been a slowdown compared to earlier months. Of the positive elements to be pointed out this month is the upswing in the private passenger car demand with an increase of 16.4% y/y having been recorded, taking its share to around 61.4% of the market, although the rate of scrappage driven sales is perhaps not as high as it could be given the age of the country's vehicle parc with a remaining 9.5 million passenger cars over 15 years old on Italy's roads. 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 as the need to replace becomes even more important. Even so, the number of registrations made will be considerably below the previous decade, with little sign that it will be close to returning to these highs in the company’s current forecast visibility.

The UK market's increases continued to be fuelled by new model launches, buoyant business and consumer confidence and the most important factor; namely the highly competitive discount and incentives and environment that is still fuelling sales volumes at the UK's car dealers. In addition cars bought on a three-year cycle following the stabilisation of the last global recession are now being replaced. The market should remain relatively stable for the rest of 2015 despite the fact that UK GDP growth slowed appreciably to 0.3% q/q in the first quarter of 2015. For the full year, IHS Automotive's forecast for the UK passenger car market remains at the recently revised figure of 2.56 million units by the end of 2015, a gain of over 3% y/y. We are also looking at around a 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. Across the region the company is foreseeing a slower growth rate than the market has seen so far this year. As a result, IHS continues to forecast an uplift of 4% to 12.6 million units.