Automotive Industry and Markets

Europe Market

The Western European passenger car market remained in the growth zone in 2017.

Western Europe

The Western European passenger car market remained in the growth zone in 2017. More than 14.3 million new cars were registered in Western Europe last year, which was a rise of almost 3 percent. Against the background of continually increasing employment, solid economic development and attractive financing conditions, the Western European passenger car market nearly returned to its average level from before the crisis. The market grew by 4 percent in the first half 2017, although in the second half it lost some of its momentum and increased by a good 1 percent. Yet 13 of the 18 countries ended the year with a positive result. Spain and Italy in particular again proved to be the European growth drivers. And 2017 was also a successful year for passenger car business in Germany. More than 3.4 million new registrations (+3 percent) resulted in the largest market volume of this decade.

Last year was not a good one for the British passenger car market. After two record years in succession, sales of new cars fell by 6 percent last year to just over 2.5 million vehicles. This was the largest contraction since 2009, when the global financial crisis held back demand. The market got off to a good start in 2017, but growth in the first quarter (+6 percent) was mainly due to purchases brought forward to avoid the hike in vehicle excise duty in April. This left March as the last month with year-on-year growth and the following nine months failed to match the previous year’s levels. Alongside the uncertainty about the consequences of Britain leaving the EU, business was made more difficult in particular by the devaluation of the pound against the euro.

The French passenger car market continued its upturn in 2017. The total of 2.1 million new registrations (+5 percent) again equaled the annual number of vehicles sold before the global financial crisis. In the second half-year in particular, the market picked up more speed and produced growth rates of over 6 percent in the third quarter and 7 percent in the fourth. Last year the French market was driven by the business customers. Their demand for new vehicles expanded by 7 percent. New registrations by private customers also rose, but their market share amounted to only 48 percent, failing once again to reach the 50 percent mark.

The passenger car market in Spain benefited from the ongoing healthy economic recovery in 2017. New registrations climbed by 8 percent to 1.2 million units. This meant that the market continued recovering from its all-time low in 2012 (of 700,000 new registrations). The dynamic growth was principally due to commercial customers, whose demand increased by 13 percent to 370,400 units. In Spain investments in the vehicle fleets are often made in leasing and rental cars, where demand soared by 9 percent last year (225,100 units). In contrast, new registrations by private households lost some momentum but still accounted for a good half of new passenger car registrations. The state scrapping bonuses that encouraged purchases of energy-efficient passenger cars (PIVE), and had been extended for a number of years, finally came to an end in mid-2016. Last year private demand increased by only 4 percent, reaching 639,500 units.

The Italian passenger car market also continued its recovery. With 8 percent growth, it already recorded the fourth growth year in succession. However, the overall number of new registrations, on 2.0 million, remained far below its pre-crisis level because in the peak year 2007 almost 2.5 million passenger cars were newly registered. The business customers enjoyed a special benefit last year (as in 2016), as extended depreciation options – which also applied to newly registered passenger cars – stimulated demand. As a result the new registrations by commercial customers added a massive 27 percent in 2017 and totaled 434,500 units. Private customers, on the other hand, were hesitant about buying cars and new registrations by private households lost 2 percent (1.1 million units).

Last year brought mixed results for the smaller Western European markets. Double-digit expansion was seen in Iceland (+15 percent) and Greece (+12 percent), and growth was also recorded in the Netherlands (+9 percent), Portugal (+7 percent), Austria (+7 percent), Norway (+3 percent) and Sweden (+2 percent). In Denmark and Finland, on the other hand, sales only equaled the 2016 level, while Switzerland (-1 percent) and Ireland (-10 percent) failed to do so.

Eastern Europe

New EU Countries
With growth of around 13 percent last year, new passenger car registrations in the new EU countries rose above the 1.3 million mark for the first time. This means the new EU Member States continued their growth path that started in 2014 and has brought double-digit expansion every year since then. Poland is the largest individual market among the new EU countries, and with 486,400 new registrations it recorded a rise of 17 percent. Growth slowed down somewhat in the Czech Republic, falling from 12 percent in 2016 to 5 percent last year (271,600 units). Slovakia totaled 96,100 newly registered passenger cars (+9 percent), thus setting a new record. By contrast, other Central and Eastern European markets are still clearly suffering the after-effects of the global economic crisis. For example the Hungarian passenger car market, despite 20 percent growth to 116,300 new registrations in 2017, still needs another 70,000 units to match its pre-crisis level. And the Romanian market recorded 105,100 new registrations in 2017 (+11 percent), which was around 66 percent below its all-time high in 2007.

Turkey
Shortly after the financial crisis the Turkish passenger car market embarked on an astonishing path of expansion, and by 2017 new registrations had increased to 722,800, i.e. double the 2007 figure. However, last year’s sales lost around 5 percent in comparison with 2016. Demand was held back by price increases following the devaluation of the lira and the rise in special consumption tax (ÖTV) levied on vehicles as of November 2016. Overall, the Turkish economy probably grew by at least 6 percent last year. This growth is primarily the result of massive tax reductions and loan subsidies from the Turkish state, designed to bolster the economy following the attempted coup in the summer of 2016. The side-effects of the economic support program are a high annual inflation rate and an increasing budget deficit.

Passenger car production in Turkey is still expanding on the back of keen export demand. In 2017 the number of vehicles built rose by 20 percent, reaching a new record of 1.1 million units. Of these vehicles 921,400 were sold abroad, which was a year-on-year rise of 24 percent.

Russia

In 2017 the Russian light vehicle market showed clear signs of recovery. This trend was bolstered by improvements in general economic factors. Rising oil prices in particular supported the Russian national economy that is heavily dependent on raw materials. In addition, the ruble is now falling much less rapidly and the number of people registered as unemployed is the lowest since 2014. However, the economy is still hampered by economic sanctions.

Last year the automotive industry in Russia was again strongly supported by state programs. More favorable financing, scrapping programs, and investments in technologies for the future amounted to around 1 billion euros. In combination with large rises in real wages, this stimulated private consumption. Sales of light vehicles totaled 1.6 million, which was roughly 12 percent up on the previous year’s figure.

There is a good chance that the recovery will continue in 2018. The economic conditions remain positive and the low level of sales suggests the possibility of keen growth this year.

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

Tel: +49 30 897842 330 Fax: +49 30 897842 607
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