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.
- 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.
- 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.
- 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.
- 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.
- 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.