17 déc 20

After a 26% drop, how much better will things get in 2021?

Let’s be frank and blunt: 2020 was a terrible year for Europe's automotive industry. Due to the pandemic and assorted lockdowns, the market contracted by 26%. In 2021, things can only get better. But by how much? Dataforce has a pretty good idea. 

The auto data gurus don’t see things clearing up right after New Year. In fact, “the first half-year of 2021 (will) remain rather challenging,” Dataforce writes. Two reasons:

  • Anti-COVID containment measures will probably extend into spring, weighing down economic sentiment. 
  • Some countries terminate their crisis support for the car market, others tighten their CO2 tax rules – so not the best of times to buy a car anyway.

Pent-up demand

But like the mist over a morning field, the gloom will eventually lift. Again, two reasons:

  • Dealers and lessors now know how to navigate the obstacles of the crisis. Even in lockdown, car sales can now be maintained. Even if all other factors remain the same, the complete loss of an entire months’ worth of sales is now unlikely. 
  • The overall economy is itching to get back into a higher gear. That itch is driven by pent-up demand. “By and large, we expect growth of around 17% for the Big Five plus Belgium and the Netherlands,” says Dataforce. That would push the market to 85% of 2019 registrations.  

True Fleets

And which channel will benefit first from the rebound? The True Fleet market, Dataforce predicts – similar to what happened after the Eurozone crisis. Three reasons:

  • The leasing contract extensions of 2020 will lead to above-average replacement activity in 2021.
  • Cost savings are likely to be achieved by operational savings and downsizing vehicles rather than reducing the fleets themselves.
  • Fleets are embracing electrification, which fits well with the government-incentivised acquisition of BEVs and PHEVs as company cars.

Not doing so well: the private market. Forced to tighten their belts, consumers will delay buying new vehicles, opting for used cars instead. The expiration of various scrapping schemes and other measures aimed at the private market will further dampen any recovery. 

Rental cars

Of all channels, short-term rental has suffered the most in this past year. But, as a wise man once said: every disadvantage has an advantage. Starting from a low base means the rental-car segment will see a high-percentage growth in 2021, recovering its losses at a faster rate than the private or True Fleet segments. While we won’t see a complete recovery to pre-crisis levels in the coming year, it is clear that rental companies are going to need a significant volume of new cars to satisfy their demand. 

Dealers and OEMs

Turning to the last segment – Dealership and OEM self-registrations – Dataforce sees even stronger base effects: “Stock reductions and supply constraints have broadly limited registrations in this channel over 2020. Next year, the challenge will be to keep up production utilisation rather than just producing a sufficient number of cars.”

Furthermore, dealerships will no longer face the risk of sitting on stocks over a new lockdown and OEMs must actively steer their registrations towards tightening CO2 emission targets. Hence, it is likely that a higher share of new cars will arrive on the market as tactical registrations rather than being directly registered by the actual driver.

Authored by: Frank Jacobs