EU passenger car registrations rise 8.2%

A strong calendar effect has bolstered sales across the EU in June but the turmoil in Greece will cast a cloud over the second half of the year.

Passenger car registrations in Western Europe rose by an impressive 8.2% year on year (y/y) in the first half of the year to 7,169,984 units, fuelled by ongoing strong sales in Germany and the UK and recovering demand in some Southern European economies. The first-half result was bolstered by an extremely strong 14.6% y/y increase in June to 1,364,009 units, with two extra working days on average across the region to compensate for the negative calendar effect which flattened growth in May. This was the 23rd monthly increase exhibited by the Western European passenger car market. The countries that make up the European Free Trade Agreement (EFTA) area – Iceland, Norway, and Switzerland –rose 20.8% y/y to 49,902 units, with its year-to-date (YTD) results now standing at 244,974 units, up 7.1% y/y.

The positive calendar effect that was a feature of the Western European market in June fuelled strong results across the region’s major markets. Western Europe’s number one passenger car market Germany posted a 12.9% y/y rise during the month to 313,539 units during the month, while the UK and France also recorded accelerated sales rises of 12.9% y/y and 15.0% y/y respectively, the former being the 41st consecutive monthly increase. However, there are signs that this extraordinary period of growth may come to an end soon with private demand rising only 2% during the month. Commenting on this IHS Automotive’s Colin Couchman said, ‘Private demand looks… close to saturation point. Buyer fatigue seems to be setting in.’ Spain and Italy also recorded extremely robust sales rises of 23.5% y/y and 14.4% y/y respectively. Most markets recorded a double-digit increase as a result of the calendar effect, although among the exceptions were the Netherlands and Poland, while minor markets such as Estonia, Finland and Luxembourg declined.

In terms of OEMs the VW Group, the region’s leading passenger car manufacturer, put in another very strong performance with Group sales rising by 16.8% y/y in June to 331,244 units, although the YTD rise of 7.2% y/y increase to 1,775,021 units was actually below the overall market rate. The VW brand itself posted a strong result in June with a 17.4% y/y rise to 159,798 units, with an 8.2% y/y increase in the YTD to 867,147 units. Audi was up 17% in June but its YTD increase across the region was actually significantly below the overall growth rate with an uplift of 4.3%. Second-placed PSA just fell behind the overall growth rate in June with sales rising 12.8% y/y to 148,932 units, although the Group fell well behind the first-half market growth rate with volumes only rising 3.5% y/y to 767,369 units. Third-placed Renault significantly underperformed the overall market in June with an increase of only 4.5% y/y to 148,205 units, although its YTD sales improved on the overall market running rate with a 8.9% y/y rise to 713,965 units, which implies Renault has lately pulled back on discounting and incentives. Ford and Opel scored 16.4% y/y and 7.5% y/y uplifts in June respectively, while Ford managed a 6.8% y/y uplift in the first six months. However, Opel not only failed to keep pace with the overall market, but actually recorded a 0.7% y/y fall in the first six months to 493,338 units, which has to count as a pretty disastrous result given the recent launch of the revised Corsa and the new Adam A-segment city car.

IHS Automotive perspective

The Western European passenger car market bounced back impressively in June, at a rate that was better than expected. However the influence of the two extra calendar days should not be underestimated, and explains why growth rates went into double-digit territory in many markets. As a corollary May was particularly low for the same reason (calendar effects) but in the opposite direction.

That said, there is no getting away from the fact that the market put in a very robust performance even once this calendar effect was factored in. Commenting on the overall trend in June and in the first half IHS Automotive’s Carlos da Silva said, ‘In trend terms (SAAR), the EU has been on a positive path for months now and this first semester performance has been one of the most robust (growth wise) for a long time too. June is an end-of-quarter month meaning it is typically stronger than normal: dealers (and OEMs) work with quarterly targets and made their possible to reach or pass said targets (often by rushing registrations as much as possible). Usually, strong promotions and commercial operations take place on such months. This was the case this June with quite convincing effects as, for once, private buyers seemed to react. In countries like Germany or France, where Individual buyers had been quite shy (to say the least) so far, a neat improvement was witnessed in this respect. This is all good news if this trend continues, above all this much awaited comeback from private buyers.’

Da Silva went on to say that the market’s recovery is still fragile, even more so as a result of the ongoing turmoil in Greece. The deal that appears to have been reached over Greece’s debt restructuring appears to make a Greek Eurozone exit look less likely but the situation is fluid and is changing all the time. Therefore it is a fact that the level of uncertainty and risk has increased substantially in the recent week.

As such IHS Automotive considers that some hints of fear and/or relative destabilisation might be visible in the car sales numbers in the very short term – mostly in August and above all September given that we are following registration numbers. Yet we assume the impact should be limited and will not derail the general growth trend (the case of the Greek market itself is of course different). If there is a major setback during the current negotiations and the various votes in the national parliaments (which could trigger a dramatic turnaround in consumer and business confidence), we anticipate that Europe should keep on its positive rhythm, maybe only slowing down a little in the coming months. Therefore as a result of the situation in Greece and higher base levels it seems prudent IHS forecasts of 13.1 million units, a rise of 4.0% y/y looks prudent.