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27 Jan 19

2019 is “make or break” for EU5 car industry

This year could be a “make or break” one for the European car industry, predicts Autovista Group. The list of problems is short but big: WLTP, diesel, Brexit. The analysts have drawn up a list of predictions for Europe’s Big Five (EU5) markets. 

Germany

  • New-car registrations for 2019 are expected to be similar to last year: 3.4 million.
  • Diesel uncertainty means more new cars will be electric – a change supported by a change in the taxation of the private use of company cars.
  • The used-car market will continue its decline (-1.5% in 2018 to 7.19 million).
  • Diesel RVs will continue to decline but eventually stabilise. Younger cars will decline less, older cars more.
  • Petrol RVs will stop rising and achieve stability, due to weakening used-car demand and less oversupply.
  • Alternative fuel vehicles will continue to grow volume-wise, with hybrids at a much stronger rate than EVs.
  • OEM and dealership registrations of new B- and C-segment cars will grow and apply further pressure on RVs as supply increases. 

United Kingdom

  • Britain is heading for Brexit, and the only certainty is uncertainty. That is why there are wildly varying estimates for the new-car market in the UK in 2019. Best-case scenario is +4%, worst-case scenario: -10%.  
  • Keeping that in mind, Autovista’s most likely scenario foresees a contraction of the new-car market by 0.6%.
  • The performance of the used-car market and of RVs will depend on the new-car market. The current RV outlook predicts stability in the 12 month/20,000 km scenario and a 1% drop in the 36 month/60,000 km scenario. 

France

  • Diesel RVs will continue to decline in 2019, especially in the C and D segments (which have high fleet penetration), despite the fact that VATdeduction for diesel remains higher than for petrol. 
  • The RV of B-segment diesels will be less affected. Key new model launches (e.g. Peugeot 208) will even increase average diesel RVs. 
  • Petrol RVs will continue to increase, if at a slower rate. French people are driving less too, eroding the benefits of diesel. 
  • PHEV RVs will continue to increase, and EV RVs will only rise slowly in 2019.
  • WLTP will only be used for vehicle tax in France from 2020. In 2019, SUVs will therefore continue to drive value growth of the car market. 
  • The mass of WLTP-related tactical registrations in summer 2018 will impact 12-month RVs for some brands more than expected – especially in the first half of 2019.

Spain

  • Economic uncertainty and the threat of a discriminatory new tax system will slow the new car market – and especially the private channel (51%). 
  • The leasing/company cars channel will grow to 30%.
  • Diesel lost 35 percentage points of its share between 2010 and 2018. That decline will continue in 2019.
  • Demand for hybrids (+40% in 2018) will continue to grow, while EVs will exceed 1% in 2019. 
  • Although a WLTP-based vehicle tax was postponed to 31 December 2020, the new system already impact tax liabilities of new cars. 
  • Residual Values will remain stable, possibly trend slightly downward in 2019. Discounted vehicle financing is negatively affecting RVs. 
  • Diesel RVs lost between 2 and 5 percentage points in 2018 – and the downward trend continues in 2019. 

Italy

  • Recently announced tax changes that will take effect on 1 March will lead to a high volume of registrations of new cars with more than 160 g C02/km in the first two months of the year.
  • That boom will lead to an oversupply of 0-km cars in the used-car market. As a result, overall RVs will weaken.
  • Diesel RVs will be particularly strongly hit, as 70% of the 0-km stock is diesel. The drop in demand for diesels (new and used) is enhanced by the introduction of bans on pre-Euro 5 diesels by some cities.   
  • Hybrids will be the only segment with strengthening RVs. 
Authored by: Frank Jacobs