Analysis
1 Jul 15

EurotaxGlass's upbeat Q1 automotive market report: grounds for optimism

To use some driving metaphors, global stock markets have shifted to neutral, bonds are in reverse and nervous investors expect the rest of the year to be a bumpy ride. Is there light at the end of this tunnel? Actually, there is, and it is not an oncoming train. It is, in fact, the European Automotive Industry 2015 Q1 Market Report by Dean Bowkett for EurotaxGlass's, the data specialists.

Seven key findings:

  • European 2015 production is 8.1 percent lower than 2007, but vehicles produced for export are up 67.5 percent boosting capacity utilisation to within two percentage points of the typical breakeven level of 80 percent at normal times.
  • European new car sales for the EU28 and EFTA3 regions are up 6.7 percent over 2014 and look likely to hit 13.56 million units for the full year, an increase of 4.3 percent.
  • Sales have been rising by an average 5.9 percent a month for 21 straight months across the EU28 and EFTA3.
  • New car sales continue to be heavily driven by discounts and registration trends indicate that much of the growth may be coming from pushed sales.
  • OEMs need to ensure the decline in franchise dealers during the crisis does not create a problem in the used wholesale market as the rise in balloon finance for the retail sector and the recovering fleet market see more used vehicles entering the trade marketplace.
  • After sustained growth in residual values (RVs), Spain and the UK are now seeing values falling, while market conditions are keeping RVs in France, Germany and Italy relatively flat.
  • The average age of used cars should start to decrease as pent up buying tension is released.

 

A snapshot of the five key markets in the European Union — France, Germany, Italy, Spain and the UK — shows sales growth, sometimes in the double-digit range up to May, and EurotaxGlass's report expresses confidence for the remainder of this year and beyond:

France: French car sales were up 3.8 percent in the year to May and IHS Automotive is forecasting a 2.7 percent growth rate for the full year.

Germany: The latest projection is for a 3.1 percent increase in new car sales this year to 3.14 million units and rising further next year before stabilising at around the 3.2 million for the next four years.

Italy: The Italian new car market is up 15.2 percent with double-digit growth every month this year. Italy needs to replace its ageing vehicles so sales are expected to increase to the end of the decade.

Spain: New car sales are continuing to rise on the back of an 18.4 percent increase in 2014 and year-to-date sales are already up 21.7 percent.

UK: Up to May this year, the UK has recorded a remarkable 39 consecutive months of growth. Car sales continue to expand, with 2.4 percent growth in May and an overall 5.7 percent increase in registrations for the year to date.

Gazing into his crystal ball, EurotaxGlass's report writer, Dean Bowkett, looks down the road to 2020 and predicts that fleet buying habits will continue to evolve, with more vehicles than ever being bought over the internet. As well, used-car buyers will increasingly rely on apps to find cars that match their budgets and the entire purchase process, including financing, will be conducted online.

And a final forecast: The launch of hydrogen fuel cell vehicles by Hyundai and Toyota will put an alternative zero-emission powertrain into the market place, thus setting up a battle with battery-powered electric vehicles.