12 Sep 19

Predictions for Big Five’s post-peak car market

Over the last five years, new-car sales in the EU’s Big Five markets (Germany, UK, France, Italy, Spain) grew by an impressive 26%. However, Dataforce’s latest forecast warns, the new-car market in the Big Five is now passed its peak. 

Crisis? What crisis? Between 2013 and 2018, rapid growth in new-car sales in the Big Five – at an average CAGR (Compound Annual Growth Rate) of 4.7% - 
has put memories of the Great Recession firmly in the rear-view mirror. 

Although perhaps not quite. The total volume of 11.4 million passenger car registrations remained a touch below the pre-crisis peak of 11.7 million that was reached back in the 2005 to 2007 period.

More importantly: what’s next? Dataforce examined various market segments to find out. 

Private market: austerity bites

  • New-car registrations for private households were 20% below the pre-crisis peak of 2006. This is due to the tax increases and cuts in social welfare in many countries, which have harmed the recovery of disposable income. 
  • OEMs have responded to lower private demand by increasing tactical registrations – pushing up CAGR up 5.8% for the rental-car market, and 5.7% for the demonstration-car market (compared to just 3.7% for the private-car market). 
  • One-off boosts (e.g. increased replacements in Germany, favourable exchange rates in the UK) have somewhat propped up sales in this segment but will be absent in the future. 
  • As austerity continues to bite, sales growth on the private market will therefore stall, Dataforce predicts. Furthermore, the cost of emissions regulations will reduce the margins for tactical registrations. 

Fleet growth everywhere (except the UK)

  • Corporate fleets make up 24.2% of all passenger-car sales in the Big Five. As for demo cars, the average CAGR for this segment was 5.7%.
  • Dataforce predicts that due to Brexit, the annual volume of UK’s true fleet market – Europe’s largest – will shrink by 160,000 new registrations, compared to its peak in 2016. For context: 160,000 units is about the size of the entire Dutch true fleet market.  
  • The true fleet market has growth potential in the EU’s other four big markets. Given the ‘War for Talent’, company cars (or long-term rentals) are becoming an option for an ever-broader range of employees. Plus, there’s the shift in preference from ownership to usage, for a monthly fee. 

Wins for BMW, Peugeot and Audi 

  • On a brand level, the fact that the true fleet market has the biggest growth potential (at least in four of the Big Five), will translate into growth for some brands more than others, says Dataforce. In particular, BMW, Peugeot and Audi will be the biggest winners. 
  • On the other side of the spectrum, Nissan, Ford and Opel/Vauxhall will suffer from their strong dependency on the British market. 
  • In terms of percentage growth, two brands, Tesla and DS are to double their True Fleet Market sales. They are followed by Lexus, which Dataforce expects to expand its European fleet business substantially.
Authored by: Frank Jacobs