LMC Automotive European Passenger Car Sales Update (July 2020)

• West European car registrations fell by 2.2% year‐on‐year (YoY) in July. The selling rate climbed to 14.3 mn units/year. Alongside the easing of lockdown restrictions, government incentive schemes are certainly playing a positive role in boosting sales demand. Nonetheless, the challenges of the uncertainty surrounding COVID‐19 coronavirus and the threat of future containment measures still remain.
• In July, French registrations saw a second month of positive YoY growth, up 3.9% YoY. In the UK, pent‐up demand meant sales saw double‐digit growth, up 11.3% YoY, while the selling rate grew to 2.5 mn units/year. In Germany, sales were down 5.4% YoY, but the selling rate improved to 3.6 mn units/year. Italy saw yet another contraction, with registrations falling 11.0% YoY. Spain sales saw their first YoY gain this year, up 1.1%, alongside a selling rate of 1.2 mn units/year.
• Recovery from the rock‐bottom result in April continues for the region, with some countries now experiencing positive YoY growth. However, the fact remains the Western European auto market is in deep crisis. In year‐to‐date (YTD) terms, the region currently sits 35% below last year’s result. We expect this figure to improve through H2 2020, as consumer confidence picks up, spurred on by further government support. Our 2020 outlook for the region continues to see a major contraction, at ‐24%, only slightly better than we projected last month.

West European car registrations fell 2.2% YoY in July. The selling rate reached 14.3 mn units/year, the best result seen since February and up from 10.3 mn units/year in June. The recovery continues, with several countries seeing positive YoY growth in July. Nonetheless, YTD figures emphasize the damning effect lockdowns have had on the region’s performance so far this year, with total West European sales down 35% on the same period in 2019. With consumer confidence still low, government incentive schemes will be a key factor in shaping the recovery of a number of markets across the region through H2 2020, with progress already seen in France and Spain. However, with the virus still in circulation, the serious downside risk of further COVID‐19 outbreaks remain. Any localised spikes will undoubtedly require some form of containment measures, which would act as a headwind to ongoing recovery in the region.

Delays in registrations, as well as the pent‐up demand built from previous months, continue to distort the latest registration figures, making it difficult to determine the true underlying level of market demand currently. Even so, the region is certainly seeing signs of improvement. In France, sales improved YoY for the second consecutive month, up 3.9% YoY in July — the enhanced government scrappage incentive scheme has proved very successful, though it ended at the end of July, with a more modest scheme taking its place. In Spain, sales grew for the first time this year, up 1.1% YoY — this positive result has been attributed to the purchase aid plan recently launched by the government. Italy saw yet another double‐digit contraction in registrations, albeit half the size of the previous month’s fall, down 11.0% YoY. However, this negative result is due, at least in part, to buyers awaiting the crisis incentives introduced on August 1st. In Germany, car sales fell by a modest 5.4% YoY, a significant improvement on last month for the region’s largest car market. The UK saw strong growth, up 11.3% YoY, a marked improvement on the 34.9% fall in June — though this solid growth is attributable to pent‐up demand.