Automotive Industry and Markets

Europe Market

In 2014, following four successive years of decline, the West European pssenger car market returned to growth.

Development of European Markets

In 2014, following four successive years of decline, the West European passenger car market returned to growth. The level of new registrations rose by almost 5 percent to 12.1 million passenger cars. The positive trend, which began in the second half of 2013, continued unbroken throughout 2014. December was the 16th successive month of growth in the passenger car market.

But with around 1.8 million new vehicles, new passenger car registrations in France only reached the previous year’s level. Whereas in the first three quarters the market was still growing, passenger car demand in the fourth quarter of 2014 fell by almost 5 percent. Admittedly, there was a special effect at work here: the significant tightening up of the bonus-malus system with effect from 1 January 2014 triggered a significant preemption effect in December 2013. The adjustment to the bonus-malus system with effect from 1 January 2015, on the other hand, was significantly more benign. The passenger car market reflects the situation of the French economy as a wole. GDP increased by 0.4 percent in 2014. The unemployment rate remained at a record level.

For 2014 as a whole, the Italian market, after four years of significant falls, achieved an increase of more than 4 percent (1.4 million passenger cars). Admittedly, 2014’s market volume was still a good 1.1 million units below the 2007 level. There was a particularly large increase in new registrations of rental cars, up by around 14 percent compared with the year before. Private and other commercial new registrations were also up (+2 and +3 percent, respectively). The private share in Italy achieved a good 62 percent in 2014. However, the Italian economy continued to decline. In 2014, the national economy shrank further (GDP 2014: -0.4 percent). Only this year is minimal growth anticipated (+0.4 percent).

In 2014, the British passenger car market grew by all of 9 percent to reach a market volume of almost 2.5 million units, making it the highest level in the past ten years. Overall it was the fourth-best result ever, only from 2002 to 2004 were new registrations higher. Higher employment, low interest rates, attractive financing models and an improvement in consumers’ asset situation had a markedly positive effect on the passenger car market. Passenger car demand grew positively across all owner groups (private owners +10 percent, business owners: +9 percent). UK GDP grew by 2.6 percent in 2014,  ignificantly higher than the average of other EU countries. German registrations achieved the anticipated result, again breaking through the 3 million barrier.

In addition to a pickup in the Spanish economy, the PIVE and PIMAAire environmental incentives available throughout the period lent the market significant forward impetus. For the year as a whole, the Spanish passenger car market achieved a volume of 855,000 units (+18 percent). By way of comparison: in 2007 there were more than 1.6 million new registrations. The seventh round of the PIVE program (1,000-euro government subsidy, 1,000-euro manufacturer's subsidy) started in January 2015. The budget was used up in April 2015. The subsidy boosted private registrations in 2014 by a good 21 percent (share of the total: 57 percent). Company cars, benefiting from PIMAAire, increased by almost 14 percent (share of the total: 25 percent). Demand by rental car companies (+16 percent), which have traditionally had a large share in Spain (share of the total: 18 percent) followed a similarly positive path.

Eastern Europe defies the Ukraine crisis

The year 2014 saw double-digit growth of fully 14 percent in new passenger car registrations in the new EU countries to reach 895,700 new vehicles. Almost all markets, with the exception of Bulgaria, Estonia, Slovakia and Slovenia experienced double-digit growth. This was the first increase the new EU countries had seen since 2007. The markets still clearly bore the stamp of the financial crisis. For example, the Romanian passenger car market was still 242,400 units short of the level eight years ago. The Hungarian passenger car market also lost 104,200 units compared with the size of the 2007 market. Only Poland, the Czech Republic and Slovakia managed to grow for the first time since 2007. Poland remained the biggest single passenger car market in the new EU in 2014, growing by 13 percent, or 327,200 units, attaining the highest market volume since 2003 in the process. The Czech Republic  achieved a record year with 190,300 passenger cars.

Russia: Not just a political crisis

The Russian light vehicle market suffered a severe setback in 2014 as a whole. A negative economic environment – the low price of crude oil in particular adversely affected the strongly commodity-dependent Russian economy – pushed new vehicle sales significantly below the previous year’s level. Around 2.5 million passenger cars and light trucks were sold in Russia last year – the fall in the ruble and capital flight weakened domestic  consumption, thereby accelerating the clear downward trend. The Ukraine conflict as well – and Russia’s consequent confrontation with Europe and the USA – was not without consequences for the light vehicle market. Consumers’ purchasing mood suffered an additional fall against the backdrop of Western economic sanctions.

The revamped “scrappage premium” (the Russian government is subsidizing the purchase of a domestically produced new vehicle until the end of 2015 if it replaces an old vehicle in return) was unable to cushion the decline – in 2014 light vehicles sales fell a good 10 percent short of the previous year’s level.

The future sales situation is likely to remain extremely strained: the Ukraine crisis, inflation, the fall in the oil price and continued Western sanctions could result in the biggest collapse in the Russian light vehicle market since 2009. The end of year uptick – with almost 270,700 units, December 2014 was the most buoyant December of all time for sales – was therefore not to be interpreted as signaling the beginning of a recovery. Instead, December’s increased sales were triggered by panic buying in the face of the falling ruble.

Dr. Manuel Kallweit Head of Department Markets, Analysis, Raw Materials, Statistics

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