April Brings Higher New Car Sales in Most Western European Markets

French Market Witnesses Third Month of Solid Growth...

The French vehicle manufacturers' association, the CCFA, says that 198,618 passenger cars were registered in France last month, which is 15.1% higher than the previous year when 172,621 new cars were sold, on a raw data basis. Taking into account the fact the Easter holidays fell in March this year and thus that April 2008 had two more working days (22) than April 2007 (20) the year-on-year (y/y) rise was a more modest 4.6%. This means that April was the third consecutive month of solid growth for the French passenger car market, which struggled its way through 2007.

Sales of light commercial vehicles (LCVs; weighing less than five tonnes) surged by 11.3% on a raw data basis in April, to 42,445 units, or by 1.2% on an equal working-day basis. That means that a total of 241,063 light vehicles were registered in France last month compared to 210,741 units in April 2007, which is a 14.4% increase, or 4% higher when seasonally adjusted.

For the year to date (YTD), with 724,739 registrations, 4.8% more passenger cars have been registered so far this year, compared to the first four months of 2007, or 3.5% more on an equal working-day basis. Total cumulative light vehicle registrations are up by 3.4% to 887,508 units, and by 4.7% on an unadjusted basis.

All three French brands enjoyed good growth in their passenger car sales during the month and all three outperformed the market on an equal working day basis.

...As Italian Market Suffers Fourth Consecutive Month of Decline

Figures released by the Italian vehicle manufacturers' association ANFIA show that Italian new car demand fell for the fourth month in a row in April, to 201,844 new units. This was a 2.9% fall on the previous year and does not take into account the fact that April 2008 had several more working days than April 2007. Factoring that into the comparison, the y/y fall would be far greater. This follows an exceedingly weak March, when demand slumped by 18.8% on the previous year. Cumulative demand for the first four months of the year is now 8.2% lower than the corresponding period in 2007.

Fiat Auto managed to outperform the market, however, growing registrations from its three brands of Fiat, Lancia and Alfa Romeo by 1.4% to 67,742 new units, giving it 33.6% of the market.

Deceptive Increase in Demand Seen in Spain

Figures from ANFAC, the Spanish vehicle manufacturers' association show that 123,565 new cars were registered in Spain last month, compared to 121,685 the year earlier. On a raw-data basis, this means that demand grew by 1.5% y/y. However, taking into account that there were three more working days in Spain in April 2008 compared to April 2007, demand actually fell by around 16%, ANFAC said. For the YTD, at 417,303 units, new car demand is 11.5% lower than the first four months of 2007 when 532,346 units were registered.

Increases Seen in Most Other European Markets

• In Portugal, 18,427 new cars were registered in April, compared with 16,280 the previous year, according to the Portuguese Auto Dealers' Association ACAP. This equates to a growth of 13.2% on an unadjusted basis. No figures were given when taking into account the extra working days that occurred in April 2008. For the first four months of the year, demand is up by 12.1% on an unadjusted basis, to 73,655 new cars compared with 65,728 in the January–April 2008 period. Renault remains the Portuguese passenger car market leader, with 12–13% of the market.
• In Belgium, new car registrations surged by 29.3% in April to 61,703 units, up from 47,713 a year earlier, Febiac said. This comparison does not take into account the extra working days in April 2008.
• Bilsweden statistics show that 27,748 new Swedish passenger cars were registered in April, which is a 1.1% growth on the previous year. Cumulative demand for the first four months of the year is 6.6% lower than January–April 2007, however. 28.2% of cars registered last month were classed as environmentally friendly, the trade association said, up from 14.1% a year earlier.
• In Finland, 15,500 new cars were registered in April, equivalent to a 26.1% growth on the previous year, according to the Finnish trade association for the automobile sector. This takes YTD registrations to 61,600 new cars, which is 17% higher than the year-earlier period. The growth in the market has been attributed to the new car tax reform, introduced in January 2008.
• In Ireland new car demand plummeted by 21% in April, at 13,363 units registered during the month according to the Society of the Irish Motor Industry (SIMI). At 106,307 units, this takes YTD demand 9.3% lower than the January–April 2007 period. Consumer confusion caused by upcoming changes to the Irish Vehicle Road Tax (VRT) and road tax regimes, due to be introduced on 1st July 2008 has been partly blamed for the fall in demand so far this year.

Outlook and Implications

It is hard to give a Europe-wide prognosis for new car demand, given the varying factors at play in each of the markets. In France, for example, buying trends have been distorted after the introduction of the new "bonus malus" taxation system which rewards buyers of low emission cars with a tax rebate but penalises drivers of higher emission cars with increased taxes. There was a surge in demand at the end of 2007 as drivers rushed through purchases of larger and less efficient cars before the new rules came into place. Demand then slumped in January with the market showing good signs of health in February, March and April. However, there is some forced element to this, which means that the underlying level of private new car sales is still largely directionless. Because of this, Global Insight expects French passenger car demand to remain flat compared with 2007 at 2.07 million units.

In Italy, political uncertainty ahead of the general election in the middle of last month greatly hampered consumer confidence which made itself felt on the new car market, while deepening economic concerns and high oil prices have further negatively affected Italian passenger car demand so far in 2008. According to the association of foreign carmakers in Italy UNRAE, new car orders for the first four months of the year are around 20% lower than the previous year, suggesting that no improvement can be expected from the market in coming months. This concurs broadly with our forecast, which projects sales of 2.37 million units for the full-year 2008, which would be 5.7% down on 2007.

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