IHS Markit Observations and Commentary EU passenger-car registrations increase 5.9% y/y during November – ACEA
The passenger car market in the European Union posted another month of growth in November, according to the latest data published by the European Automobile Manufacturers' Association.
IHS Markit perspective
- Implications: The passenger car market in the European Union was again helped by an additional working day in November.
- Outlook: For the full year 2017, IHS Markit expects registrations to grow by 3.9% year on year to 15.25 million units, a significant gain from the low of 11.9 million units in 2013. However, we expect sales to peak next year at 15.4 million units before falling back towards the next decade.
The passenger car market in the European Union posted another month of growth in November, according to the latest data published by the European Automobile Manufacturers' Association (Association des Constructeurs Européens d'Automobiles: ACEA). Registrations during the month increased by 5.9% year on year (y/y) to 1,216,702 units. As a result, growth in the year to date (YTD) has strengthened to 4.1% y/y to 14,047,460 units.
November was also a positive month for the European Free Trade Association (EFTA) market, albeit to a lesser degree. Sales in this region - made up of Iceland, Norway, and Switzerland - grew by 2.4% y/y to 41,518 units during the month. EFTA sales in the YTD remain marginally up, by 1.2% y/y at 445,901 units.
Registrations in the EU last month were helped by gains in four of the big five markets in the region. The French and Spanish markets were of particular note, with the former rising 10.3% y/y to 180,005 units and the latter growing by 12.4% y/y to 104,170 units. Germany also put in a positive performance, gaining by 9.4% y/y to 302,636 units, and the Italian market was up by 6.8% y/y to 156,332 units. However, the UK suffered yet another fall, of 11.2% y/y to 163,541 units, as the market slows from its record-breaking highs, not helped by slackening macroeconomic fundamentals and weakening confidence.
Outside these big five markets, there were many more strong performances. A double-digit percentage gain was recorded in the Netherlands (17.6% y/y to 37,713 units) as the repercussions from tax changes in 2016 eased alongside an improving economy. The Polish market grew by 10.8% y/y, while other markets in Central and Eastern Europe recorded gains of a similar scale or even larger. However, it was not all big gains. The Belgian market was flat during November, while the Irish market struggled with a significant number of used-car imports coming in from the UK.The growth in the wider EU market meant gains for the majority of larger OEMs in the region. Registrations for the Volkswagen (VW) Group grew by 5.5% y/y to 299,009 units. Although the VW Polo is currently transitioning to a new-generation model, sales of the VW brand gained by 2.6% y/y to 137,386 units in the month as the Golf's low base of comparison a year earlier helped it to record strong gains, alongside the introduction of the T-Roc crossover. Furthermore, new sub-compact crossovers are likely to have helped drive Skoda and SEAT sales, which grew 11.4% y/y and 11.8% y/y, respectively. The group's premium brands also had a better month, with Audi sales growing by 2.6% y/y and Porsche sales down just 0.1% y/y.
Groupe PSA established a comfortable lead over Renault Group last month to become the biggest-selling French-based automaker in the region. Its registrations in November increased by 83.3% y/y to 196,650 units. However, this was by virtue of it completing its acquisition of the Opel/Vauxhall brand from General Motors (GM) at the beginning of August, which accounted for 70,505 units of its sales in November. This was a fall of around 3.8 y/y. However, there was more positivity from the other key PSA brands: sales at Peugeot - which is benefiting from the introduction of the 3008 and 5008 crossovers - rose by 20.7% y/y to 79,186 units, while Citroën sales grew by 14.8% y/y to 43,419 units. Nevertheless, the DS Automobiles brand - which is yet to see new-generation vehicles come on stream - remained the weak link, its registrations falling during the month by 8.7% y/y to 3,540 units.
The Renault Group put in a solid performance during the month, its sales up 10.1% y/y to 137,009 units as Renault-brand volumes increased by 5.3% y/y to 98,109 units and Dacia registrations grew 24.3% y/y to 38,436 units.
Other mainstream OEMs also posted growth that either outpaced the market or was around par. These include Ford (+4.2% y/y to 78,463 units), Toyota Group (+12.3% y/y to 54,768 units), Hyundai (+6.1% y/y to 41,686 units), and Kia (+12.3% y/y to 36,104 units). On the other hand, sales at both Fiat Chrysler Automobiles (FCA) and Nissan declined.
Premium OEMs' sales grew in November, but behind the overall market rate. Similar to VW Group's Audi brand, BMW Group sales increased by 2.5% y/y to 83,590 units during the month, while Daimler sales were up 2.9% y/y to 77,537 units and Jaguar Land Rover (JLR) registrations increased 3.6% y/y to 16,616 units. The exception was the Volvo Car Group, whose sales dipped by 2.4% y/y to 23,262 units.
Outlook and implications
Similar to October, the European passenger car market was boosted in November by a positive calendar effect, with one extra working day recorded by ACEA compared with the same month last year. IHS Markit's Western European forecast manager, Martin Benecke, noted that there were several impressive market performances during the month, while the performances of the "New EU" countries - mainly in Central and Eastern Europe - were significantly stronger in November compared with the standard EU15+EFTA countries. Furthermore, the bigger "Nordic" countries displayed a consistent performance, with all markets recording gains, including Denmark, which has had a tumultuous past few months following a public debate on taxation of passenger cars, an issue that has only recently been resolved. However, the main standout trend in the region during the month according to Benecke was the growing split between the performances of gasoline (petrol) and diesel vehicles.
From an economic perspective, data from individual countries show that GDP growth was spread evenly across the region in the third quarter. Eurozone GDP growth in the third quarter benefited from robust quarter-on-quarter (q/q) expansion in Germany (0.8%), Spain (0.8%), and Austria (0.6%), and solid growth of 0.5% q/q for both France and Italy, the former boosted by contributions from private spending and fixed investment. Spanish growth was down from 0.9% q/q in the second quarter of 2017.
Benecke says that market growth should prevail as pent-up demand continues to be released, mainly in Southern European markets, and flows into fleets - not only for company cars but also rentals and pre-registrations - which should help ensure healthy demand before the impact of Brexit is amplified. For the full year 2017, IHS Markit expects passenger car registrations in the EU to grow by 3.9% y/y to 15.25 million units, a significant gain from the low of 11.9 million units in 2013. However, we expect sales to peak next year at 15.4 million units before falling back towards the next decade below the 15-million-unit mark.
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