LMC Automotive European Passenger Car Sales Update (June 2020)

• West European car registrations fell by 24.8% year‐on‐year (YoY) in June, while the regional selling rate stood at 10.3 mn units/year. From the record‐low in April, the May improvement has continued into June, though it is clear that demand remains very depressed and COVID‐19 continues to weigh heavily on the regional economy.
• French registrations were a high point for the region last month, with a 1.2% YoY increase in sales, a very welcome result that proved to be an exception, with all other markets again down YoY. Italy saw registrations fall 23.1% YoY, with a selling rate of 1.4 mn units/year for the month. In the UK, sales improved from the dismal 20k units sold in May to 145k units in June — this is still a sizeable YoY drop, however, of ‐34.9%. In Germany, recovery was below expectations, with a YoY contraction of 32.3% and a selling rate of 2.3 mn units/year. Spanish registrations fell by 36.7% YoY, to 83k units for the month.
• Once again, the impact of COVID‐19 coronavirus dominates the forecast for Western Europe, even though we are in the early part of the recovery phase. Government incentive schemes could be a significant determinant of the pace of this recovery, as seen in France. Our 2020 outlook remains unchanged, with a 26% contraction expected this year for the region as a whole. This reflects our expectation of gradual recovery in H2 2020 spurred on by improving consumer activity as lockdown measures continue to ease.

West European car registrations were down 24.8% YoY in June, showing further recovery from April’s record‐ breaking low. The selling rate was 10.3 mn units/year, up from 6.3 mn units/year the previous month, reflecting an easing of coronavirus lockdown conditions. We expect selling rates to continue on their generally upward trajectory over the second half of the year, in a clear but uneven recovery.

Establishing the true underlying level of market demand in the latest figures is complicated by delayed registrations and pent up demand from the preceding months, which itself will vary somewhat country by country. Car sales in Germany fell by 32.3% YoY, a disappointing result in the region’s largest car market, and possibly reflecting that this market was not impacted as heavily as some others earlier in the year. Spurred by recent announcements from the French government concerning specific auto sector aid, French car registrations actually increased in June by 1.2% YoY. Other countries were far less fortunate; sales in Portugal fell by 56.2%, while the majority of countries fell by somewhere between 15% and 35%. The UK still lags behind a little, with a drop of 34.9% YoY, but is no longer mired in the extreme negative territory of the preceding two months.

In our last report, we mentioned the continued presence of substantial upside and downside risks to the outlook, depending on incentive schemes and a potential second wave of cases. With the most recent data, the ability to inject life into the auto sector via government support schemes is clearly apparent from the positive YoY French result. In terms of downside risk, no substantial second waves of the virus have yet affected sales, but this risk is far from resolved: in the UK, for instance, parts of the country have been put into a localised lockdown, highlighting the possibility of more prolonged consequences, in some parts of the region at least.