LMC Automotive European Passenger Car Sales Update (January 2021)

The West European selling rate nosedived to 9.9 mn units/year in January 2021, the lowest level since May last year. The extension of lockdown measures in many key markets continues to suppress consumer demand, even though many showrooms can still offer ‘click‐and‐collect’ services. Moreover, the end of some government‐led incentives, alongside tax changes in certain markets, culminated in a particularly poor start to the year for West Europe registrations.

The German selling rate plummeted last month, down to 2.4 mn units/year, following the ending of the temporary VAT reduction in December 2020. For French registrations, the selling rate saw a more modest fall, down to 1.8 mn units/year. In Italy, the selling rate dropped to 1.5 mn units/year. Spanish registrations more than halved in YoY terms, as the selling rate fell to just 0.6 mn units/year. In the UK, the selling rate followed the region’s downward trend, falling to under 1.4 mn units/year in January.

We have lowered our outlook for 2021 since last month’s report as lockdowns aimed at suppressing the spread of COVID‐19 apply even greater downward pressure on near‐term sales than previously assumed. There is light at the end of the tunnel in the form of mass immunisation, and we maintain the expectation that selling rates with improve from the summer onwards. However, the path of recovery hinges on the success of the vaccine roll out; added to this forecast risk, the auto chip shortage presents a further potential brake to near‐term sales.