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Western European passenger car registrations jump 26.3% y/y during August
Implications: The latest IHS Markit data suggest that the Western European passenger car market has had a one-off surge of 26.3% y/y during August, thanks to OEMs registering non-WLTP-compliant vehicles.
Outlook: This performance, which has resulted in a record-breaking SAAR this month, is not expected to continue and is more likely to result in a softening in the next few months. Nevertheless, IHS Markit currently forecasts that registrations will increase by 1.1% y/y to 14.5 million units before beginning to decline the following year.
IHS Markit Perspective:
The growth rate of the Western European passenger car market has leapt significantly during August, according to the latest forecast released by IHS Markit. Registrations during the month are forecast to have grown by 26.3% year on year (y/y) to 1,1013,851 units. This has led to a year-to-date (YTD) forecast of 10,139,565 units, a gain of 4.8% y/y. Furthermore, the seasonally adjusted annual rate (SAAR) stood at 18.364 million units, while the final trend cycle stood at 15.175 million units.
German passenger car market registrations during August rose 24.7% y/y to 316,045 units. The result pushed the YTD result for the first two-thirds of the year up by 6.4% y/y to 2,473,284 units.
Passenger car registrations in France jumped by 40% y/y, increasing from 107,449 units to 150,391 units. There was no benefit from working-day factors. Registrations in the YTD have now grown by 8.9% y/y to 1,513,937 units.
The Italian passenger car market gained by 9.3% y/y to 91,551 units. This has relieved further downward pressure on the market in the YTD, although it still ended this eight-month period down by 0.1% y/y to 1,364,773 units.
The Spanish passenger car market jumped by a further 48.7% y/y to 107,692 units in August. This has helped to maintain a strong growth trajectory in the YTD, with an increase of 14.6% y/y to 973,517 units.
The UK passenger car market was another to see a large increase during August. Registrations increased by 23.1% y/y to 94,094 units. However, despite the scale of improvement this month, registrations remain down firmly in the YTD. For the first eight months of 2018, registrations have retreated by 4.2% y/y to 1,571,986 units.
Outlook and implications
As can be seen from the highlighted data above, Western Europe has seen a terrific swing this month. Indeed, as IHS Markit automotive economist Nigel Griffiths notes, this is a record-high SAAR in this market, which had previously peaked at 15.6 million. He notes that this "clearly shows exceptional and temporary pre-registration activity associated with the move to Worldwide Harmonised Light Vehicle Test Procedure (WLTP) vehicles from 1 September." Many OEMs have been forced to try to attract private consumers and business customers by offering incentives, as well as undertaking tactical registrations, with pre-registering by dealers being prevalent. Griffiths adds that the "fact that it was again concentrated in August, the lowest sales month of the year, means the spike in the SAAR was particularly spectacular." Nevertheless, the pull forward this month is likely to mean softer performances in the months to come for some markets, particularly if customers that are in the market for a new car are attracted by already registered stock.
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