Analysis
20 Jul 20

Fleet sales tumble during coronavirus lockdown

Fleets across Europe’s largest markets have delayed cancelled hundreds of thousands of new car orders during the first half of 2020 due to the impact of coronavirue. The fleet sector is down by as much as 50% in some countries, while daily rental has suffered a decline in sales of over 90% in key markets.

Germany

In Germany, the true fleet sector outperformed the national new car market during the first six months of 2020, but was still 25.6% down year on year, while sales to rental fleets were 40.4% lower. The one bright spot has been the increasing penetration of plug-in hybrid cars in true fleet acquisitions, rising to a 12.4% market share – up 339.7%.

UK

Across the North Sea in the UK, the total fleet sector saw sales more than halve during the first half of the year, compared to the same period of 2019, down 51.5% to just 325,518 registrations.

Even with car dealerships reopening in June in England (they remained closed in Scotland and Wales for most of the month), sales failed to bounce back. “Fleet sales fell by a very substantial -45.2% to 69,498 units as businesses paused purchasing amid expenditure reviews,” said the SMMT.

Italy

The closure of the tourist industry in Italy had a heavy impact on spring sales to daily rental companies in Italy, with a fall of 97.1% in March, 99.7% in April and 92.4% in May, although there were signs of an increase in June. Nationwide, true fleet sales fell 43% to 127,444 cars in the first half of 2020 compared to 223,621 during the same period of 2019.

Spain

The month of June offered a glimmer of hope in Spain, where true fleet sales were ‘only’ 18.2% down on the same month last year. Over the first six months of 2020 true fleet sales fell by 38.2% in Spain, compared to 2020.

Michael Gergen, Automotive Data Specialist, Dataforce, said: “With these figures there is a light at the end of the tunnel for the end of H1 2020.”

Coronavirus impact

Sales figures for the entire new car market during the first half of 2020 reveal the devastating impact of the coronavirus lockdown on the automotive industry.

The devastating economic impact of the coronavirus on the automotive industry has been laid bare in half-year new car sales figures across Europe.

With dealerships shut, businesses closed and employees working from home, demand for new cars fell sharply across the continent during the lockdown.

Car sales falling before COVID-19

Registrations had already declined by 7.3% to 2,202,010 units across the EU, UK and EFTA region in January and February compared to the same period of 2019, before the pandemic struck Europe. The European Automobile Manufacturers’ Association (ACEA) attributed the faltering start to the year to the weakening global economy, consumer uncertainty, and tax changes in certain EU member states, which had brought forward a number of registrations to December 2019.

But since COVID-19 arrived every country across the EU, EFTA and UK has suffered double-digit falls in new car sales.

New car sales down by 35% to 50%

In Germany, Europe’s largest new car market, the KBA has reported new registrations down by 34.5% for the first six months of 2020 to 1,210,622 units. In Italy, ANFIA recorded sales tumbling by 46% to 583,960 registrations for the same period, and in Spain Anfac said the market was 51% down year-on-year at 339,583 units.

Europe’s second biggest new car market, the UK, reported 1,269,245 registrations between January and the end of June 2020, a 48.5% decline compared to the first half of 2019.

Even in Sweden, the country with the lightest coronavirus restrictions, BIL Sweden said new car sales fell by 25.1% in the first half of 2020, while light commercial vehicle sales were down by 45.6%.

2020 sales will be down by a quarter

Despite dealerships starting to open and the automotive sector resuming business, sales in June in Germany, Spain and the UK were still down by more than 30% compared to 2019, and were 23% down in Italy. The ACEA now forecasts a 25% fall in new car sales for the whole of 2020, a dramatic decline that equates to about 3 million fewer registrations - 9.6 million in total compared to 2019’s 12.8 million registrations.

Financial crisis caused six years of falling sales

This would represent the lowest sales total since 2013. Perhaps even more worrying is the ACEA’s reminder that the financial crisis of 2008-09 led to six consecutive years of declining new car sales.

Green recovery plans

As a result, vehicle manufacturers are calling on the EU and national governments to introduce stimulus packages to mitigate the impact of COVID-19.

ACEA Director General, Eric-Mark Huitema, said: “Given the unprecedented collapse in sales to date, purchase incentives and scrappage schemes are urgently required right across the EU to create much-needed demand for new cars. In the interest of our industry and the wider EU economy, we are calling for the necessary political and economic support – both on the EU as well as the member state levels – in order to limit the damage to production and employment over the months to come.”

So far, stimulus packages to save the automotive sector appear to be heavily focused on the green economy. France has already announced a €7,000 grant towards the acquisition of a new electric car, with a further scrappage bonus of €5,000 for an older diesel car. Germany has doubled its buyer incentives for electric cars to €6,000 from €3,000, and said the scheme will continue until December 2021, while drivers in Italy can access a €3,500 incentive if they scrap cars older than 10 years and buy a Euro-6 compliant model.

In the UK, Mike Hawes, SMMT Chief Executive, said a recovery package had to rescue the entire automotive sector, and not just the 'tiny fraction' accounted for by electric vehicles.

"Long-term ambition must not be confused with the short-term need to restart the sector and secure its very survival," he said.

"Electric vehicles make up a tiny fraction of the overall market, and an even smaller proportion of the UK’s automotive manufacturing output. To reboot British manufacturing and safeguard the thousands of jobs on which it depends, we would need measures that support the entire market, reflecting the diversity of UK automotive manufacturing and the range of choice available to UK consumers.”

Against this gloomy outlook, the only significant glimmer of hope comes from France, where the CCFA reported a 31.6% increase in demand in June, compared to the same month of 2019.

Authored by: Jonathan Manning
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