Executive Briefings

Western Europe Automobile Sales Fairly Strong in August

In Germany, Europe's biggest automotive market, August was another month of consolidation and strong performances during the traditionally weak holiday period. Much of the remainder of the year should see fairly robust growth in much of Western Europe, though there may be some tailing off toward the end of the year.

Western Europe Automobile Sales Fairly Strong in August

The German passenger car market should be sustained in the remaining months of 2016 by the stable macro environment, ongoing strong competition between manufacturers and certain key model launches that have taken place in recent months such as the VW Tiguan, while buyers will also be brought into the showrooms by the forthcoming revisions to the Golf and the Audi Q2. For the full year, IHS Automotive expects German passenger car sales to rise by 4.5 percent year over year to 3.36 million units.

The reasonably solid passenger car market in France comes despite confirmation that the economy stagnated during the second quarter of 2016, with private consumption decelerating sharply during this timeframe. We anticipate growth to return during the third quarter of the year with the economy projected to expand by 1.2 percent in 2016 as a whole. The consequences of the UK's decision to vote to leave the European Union at the end of June will prove to be difficult to quantify in the short term. For now we anticipate that GDP growth will fall back to 0.6 percent during 2017 but rebound to 1.3 percent in 2018. IHS Automotive has reduced its forecast for the French market marginally. However, we still anticipate that passenger car registrations this year will grow by just under 6.0 percent y/y to 2.03 million units, followed by increases to 2.05 million units during 2017 and 2.08 million units in 2018.

Italian passenger car registrations were also helped in previous months by large incentives offered to customers, initially by FCA, but subsequently by many of its rivals, which led to private customers bringing forward their purchases and did not help the market in July. Overall, IHS expects the Italian economy to grow by 0.7 percent in 2016 and 0.4 percent in 2017, following a 0.6 percent gain in 2015, which is a reduction compared with earlier forecasts. Even so, IHS Automotive expects that the passenger car market will grow by more than 13.0 percent y/y during 2016 to 1.79 million units, with gains continuing until the end of the decade.

As for the Spanish passenger car market, growth occurred in August following the end of orders being taken under the eighth round of the PIVE scrappage incentive scheme, which expired in July, and the market reached its highest level for August in eight years. All sales channels contributed.

IHS Automotive forecasts an 8.7 percent y/y increase in passenger car sales during 2016 to 1.12 million units, but growth will be a weaker 1.8 percent y/y to 1.14 million units in 2017.

In the UK August is traditionally one of the two weakest months of the year, along with February, as both proceed the age-related number plate change months. Many customers will therefore hold off registering vehicles to gain the perceived advantage of having a newer vehicle. As a result, we are likely to gain a better idea of the impact on the UK market from the Brexit vote which took place in late June. Indeed, customers will have had to take a decision around this point as to whether to order new vehicles or not. Astute buyers may also take other factors into account as part of their purchase decisions, such as the weaker pound against other global currencies possibly leading to price rises further in the future. Having seen only two months of decline in the passenger car market during the past 54 months, IHS Automotive had already expected growth to come to an end at some point, albeit with another record performance during 2016. However, IHS Automotive has adjusted its expectations following the Brexit vote. While we still anticipate a 1.1 percent y/y increase during 2016 to 2.66 million units, this is likely to be dependent on the extent of the success in September. We also now expect a steeper downturn than originally anticipated for 2017, with a fall of 9.2 percent y/y to 2.42 million units, while in 2018 we see demand hitting around 2.37 million units.

In terms of the IHS Automotive full-year forecast for Western Europe passenger car sales August's sales momentum, and indeed the momentum seen throughout the summer months, means we remain confident of a relatively robust uplift, with some momentum tailing off towards the end of the year. For the time being our Western European passenger car sales remains at a 4.7 percent y/y increase to 13.8 million units.

Source: HIS Automotive

The German passenger car market should be sustained in the remaining months of 2016 by the stable macro environment, ongoing strong competition between manufacturers and certain key model launches that have taken place in recent months such as the VW Tiguan, while buyers will also be brought into the showrooms by the forthcoming revisions to the Golf and the Audi Q2. For the full year, IHS Automotive expects German passenger car sales to rise by 4.5 percent year over year to 3.36 million units.

The reasonably solid passenger car market in France comes despite confirmation that the economy stagnated during the second quarter of 2016, with private consumption decelerating sharply during this timeframe. We anticipate growth to return during the third quarter of the year with the economy projected to expand by 1.2 percent in 2016 as a whole. The consequences of the UK's decision to vote to leave the European Union at the end of June will prove to be difficult to quantify in the short term. For now we anticipate that GDP growth will fall back to 0.6 percent during 2017 but rebound to 1.3 percent in 2018. IHS Automotive has reduced its forecast for the French market marginally. However, we still anticipate that passenger car registrations this year will grow by just under 6.0 percent y/y to 2.03 million units, followed by increases to 2.05 million units during 2017 and 2.08 million units in 2018.

Italian passenger car registrations were also helped in previous months by large incentives offered to customers, initially by FCA, but subsequently by many of its rivals, which led to private customers bringing forward their purchases and did not help the market in July. Overall, IHS expects the Italian economy to grow by 0.7 percent in 2016 and 0.4 percent in 2017, following a 0.6 percent gain in 2015, which is a reduction compared with earlier forecasts. Even so, IHS Automotive expects that the passenger car market will grow by more than 13.0 percent y/y during 2016 to 1.79 million units, with gains continuing until the end of the decade.

As for the Spanish passenger car market, growth occurred in August following the end of orders being taken under the eighth round of the PIVE scrappage incentive scheme, which expired in July, and the market reached its highest level for August in eight years. All sales channels contributed.

IHS Automotive forecasts an 8.7 percent y/y increase in passenger car sales during 2016 to 1.12 million units, but growth will be a weaker 1.8 percent y/y to 1.14 million units in 2017.

In the UK August is traditionally one of the two weakest months of the year, along with February, as both proceed the age-related number plate change months. Many customers will therefore hold off registering vehicles to gain the perceived advantage of having a newer vehicle. As a result, we are likely to gain a better idea of the impact on the UK market from the Brexit vote which took place in late June. Indeed, customers will have had to take a decision around this point as to whether to order new vehicles or not. Astute buyers may also take other factors into account as part of their purchase decisions, such as the weaker pound against other global currencies possibly leading to price rises further in the future. Having seen only two months of decline in the passenger car market during the past 54 months, IHS Automotive had already expected growth to come to an end at some point, albeit with another record performance during 2016. However, IHS Automotive has adjusted its expectations following the Brexit vote. While we still anticipate a 1.1 percent y/y increase during 2016 to 2.66 million units, this is likely to be dependent on the extent of the success in September. We also now expect a steeper downturn than originally anticipated for 2017, with a fall of 9.2 percent y/y to 2.42 million units, while in 2018 we see demand hitting around 2.37 million units.

In terms of the IHS Automotive full-year forecast for Western Europe passenger car sales August's sales momentum, and indeed the momentum seen throughout the summer months, means we remain confident of a relatively robust uplift, with some momentum tailing off towards the end of the year. For the time being our Western European passenger car sales remains at a 4.7 percent y/y increase to 13.8 million units.

Source: HIS Automotive

Western Europe Automobile Sales Fairly Strong in August