LMC Automotive European Passenger Car Sales Update (August 2020)

• West European car registrations fell 15.5% year‐on‐year (YoY) in August 2020, though this compares to a WLTP‐inflated high base in August 2019. The selling rate maintained its upward trajectory in recent months, climbing to 15.1 mn units/year, as the market continues to recover from the effects of COVID‐19 coronavirus, with the positive effect of incentive measures and reopening economies set against a backdrop of the still‐present threat of future containment measures.
• Italy experienced an exceptionally strong selling rate of 2.3 mn units/year with the help of government incentives. In Germany, meanwhile, sales fell by 20.0% YoY, although the selling rate remained a solid 3.6 mn units/year. France and Spanish markets both saw a double‐digit percentage fall YoY, though selling rates were more encouraging at 2.2 mn units/year and 1.3 mn units/year respectively. In the UK, sales fell 5.8% YoY, coupled with a strong 2.9 mn units/year monthly selling rate.
• The region continues to steadily recover from the April nadir, although monthly registrations are still well down across the region. In year‐to‐date (YTD) terms, the West European car market is down by a third, with the 2020 forecast only slightly improved on last month, to just under 11 mn units for the full year.

West European car registrations fell by 15.5% YoY in August, with a selling rate of 15.1 mn units/year, a further improvement from the July figures. Gradual recovery continues across the region, but there remains a long way to go, with August figures taking the YTD growth contraction to ‐33.1%. The YoY results for the latest month are dominated by the abnormal base effect caused by the unusually high selling rates recorded in August 2019, due to WLTP distortions inflating that month at the expense of the following months. YTD figures serve to emphasise the severe impact of the COVID‐19 pandemic on the market, demonstrating that there is no way for the industry to escape this year without a serious sales deficit. Consumer confidence, while improved from earlier in the year, remains low, ensuring that government incentive schemes will continue to be a key factor in shaping recovery across the region throughout H2 2020. However, the serious downside risk of further COVID‐19 outbreaks, and the associated lockdown measures, is as present as ever.

Signs of improvement are present and consistent, although the path of recovery is proving to be a rocky one. As in previous months, the presence of pent‐up demand and incentives continues to distort the latest registration figures, making it difficult to determine the ‘true’ underlying level of market demand. In Germany, the selling rate stood at 3.6 mn units/year, similar to the July result. In France, sales fell by 19.8% YoY, breaking the two‐month streak of steadily improving results, though the selling rate was relatively strong. Spain’s selling rate of a little under 1.3 mn units/year puts it in line with the 2019 full‐year result. Italy saw the selling rate surge to 2.3 mn units/year last month with the help of government incentive support kicking in, though with the market down 39% YTD, there is a lot of ground to make up. In the UK, the selling rate rose to 2.9 mn units/year; however, August is generally a quiet month for UK sales and even relatively modest pent‐up demand from recent months can therefore have a sizable impact on the August selling rate result.