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CV registrations continue to grow in EU during April
Commercial vehicle (CV) demand growth in the European Union remained on a positive track during April, according to the latest data published by the European Automobile Manufacturers' Association (ACEA). The number of light commercial vehicles (LCVs) under 3.5 tonnes, medium and heavy commercial vehicles (MHCVs), and medium and heavy buses and coaches over 3.5 tonnes registered grew by 7.8% year on year (y/y) to 215,497 units. Thanks to growth in earlier months, registrations in the year to date (YTD) are now up by 5.8% y/y to 871,100 units.
The European Free Trade Agreement (EFTA) region - which comprises Iceland, Norway, and Switzerland - also saw growth in CV registrations in April, which increased 3.2% y/y to 7,808 units. In the YTD in this region, CV registrations now stand at 28,318 units, an increase of 4.8% y/y.
The LCV category, which again made up over 80% of CV demand in the EU last month, provided strong support to CV registrations as it gained by 8.4% y/y to 176,643 units. All the five largest markets in the region contributed to this gain, with most outpacing the whole region. France led the way with 43,485 units registered, an improvement of 12.4% y/y. Another market where strong growth was recorded is Italy, where registrations leapt by 15.6% y/y to 15,100 units, while Spain saw a relatively modest increase of 7.8% y/y to 20,315 units. The United Kingdom saw an increase of just 4.7% y/y to 24,604 units, although this is a positive performance, particularly given some of the current stresses facing the market.
Outside this group, there were some good performances from countries such as Belgium, Croatia, Hungary, Lithuania, and Poland. However, the market was also not without some weaknesses either. One of the biggest was in Sweden, which recorded a decline of 15.4% y/y, which is still likely to be down to the introduction of a new bonus-malus CO2-based taxation system for new registrations on 1 July 2018, which led to a huge pull-forward in registrations. This has had a considerable impact for this type of vehicle as virtually none of them is eligible for the ultra-low emission incentives. It may also be down to a string of strong annual gains boosting the market. Alongside this market with notable declines were Estonia and Finland.
As a result of the gains in April, LCV registrations in the YTD are now up by 5.9% y/y to 721,303 units.
Growth in registrations in the MHCV category of vehicles with a gross vehicle weight (GVW) of over 3.5 tonnes in the EU in April was 5.8% y/y, with volumes of 35,484 units. This growth has taken these registrations in the YTD to 136,575 units, an increase of 6.1% y/y. Furthermore, registrations of HCVs with a GVW of over 16 tonnes gained 5.6% y/y to 28,911 units, which helped registrations reach 111,230 units in the YTD, up 4.9% y/y. The leading market in the MHCV category during the month, Germany, put in a solid growth performance in April, as registrations increased 4.7% y/y to 9,058 units. The MHCV category was also boosted by increases in France (17.7% y/y), the United Kingdom (10.3% y/y), Netherlands (14.2% y/y), and Poland (4.1% y/y). However, Italy was down by 7.4% y/y and Spain retreated by 15% y/y.
Outlook and implications
Better-than-expected economic growth in Europe so far this year has translated into strong demand for MHCVs during April and in the YTD, according to Ewa Root, manager of IHS Markit's Global Truck Sales Service. Furthermore, with improving exports and strong retails sales, demand for heavy tractor trucks grew, while sales of heavy rigid trucks maintained the strong upward trajectory that began in 2018 and medium-segment sales improved as well. Nonetheless, the seasonally adjusted annual rate (SAAR) of sales shows that the pace of growth was below its cyclical peak in April. This has been already visible in a few countries, such as Italy and Spain, where demand growth is negative this year. Taking into account the rising economic risks, including Brexit negotiations, as well as a slowing pace of truck replacement demand in the EU, IHS Markit maintains that sales of heavy trucks will weaken in the EU this year. However, given the latest results, we may be slightly increasing our forecast in our next report.
As for the LCV category, the situation is similar from an economic perspective. This category could also see some influence on registrations in the coming months from the planned introduction of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) and real driving emission (RDE) certification during September 2019 for existing vehicles. However, lessons are also likely to have been learned from the struggles that some automakers had last year when transitioning passenger car models to meet the same regulations, which subsequently led to the restricted supply of some popular models in the weeks and months after their introduction. Indeed, automakers have already announced that their vehicles are on course to meet this year's deadline. For the full year 2019, IHS Markit anticipates that registrations of LCVs with a GVW of up to 6 tonnes will dip by 2% y/y to 2.12 million units in the EU. We also anticipate a further decline during 2020, before registrations start to rebound slowly during 2021.
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