West European car demand in May was intermediate between the two very poor months at the start of 2001, and the two much better months that followed. The seasonally adjusted selling rate came in at 14.6 mn (see Table at foot of this note), the same as the average for the year to date. There has been a slight recovery in German demand from the very depressed levels of the recent past; but this has been offset by weaker results in a number of smaller countries, and a Spanish selling rate which failed to match last month's exceptionally strong figure.

At the same time, indications from order intake data provide a warning that the improvement in Germany may not last; though they continue to provide encouraging indications for Italy and for France. When light commercial vehicles are included, we estimate the selling rate for all light vehicles (less than 6 tonnes gvw) to have been 16.3 mn units in Western Europe, with a rate of decline slightly higher than for cars alone. Looking beyond Western Europe to include in addition the countries that will eventually accede to the EU, the decline has been substantially steeper, because of a collapse in Turkish sales and a steep decline in Poland. We estimate the year-on-year decline on this basis at 5.5% for the year to date.

There was no difference in the number of weekdays between this year and last, but, exceptionally, Ascension Day fell in June last year. There was therefore one less working day during May this year than last year in those countries which celebrate a public holiday on that day - that is, all countries in Western Europe except Ireland, Italy, Spain, Portugal and the UK.

The chart below shows total West European sales. The squares represent the total number of cars sold in a year, while the hollow dots represent the selling rate in individual months, and the continuous line represents a moving average of these. We indicate the latest two months. The most recent numbers underlying this chart are appended in a Table at the end of this note.

Final data from the Kraftfahrt Bundesamt show German sales of 295,013 units in April, and our estimate of the May outcome is 322,500 units. Both the April and May numbers represent substantial improvements on the selling rate in the opening months of the year. In the first quarter, the selling rate averaged just 3.2 mn units/year, while April produced a selling rate of 3.4, and May 3.55. (In terms of the year-on-year comparisons, April showed an increase of 7% and May a decline of 8%, but as always, this tells us as much about the pattern of sales last year as about this year). On the face of it, these increases in the selling rate seem to represent the beginnings of a return to normal after the very poor first quarter results. However, it would still be premature to reach this conclusion. Incoming order data remain even weaker than in the recent past, and this brings the threat of more unpleasant surprises in the following months' registrations data. Our website carries a freely downloadable pdf file with our reflections on the downturn in German sales during last year and this year.


"The French data produced another pleasant surprise."

The French data produced another pleasant surprise. It came in the wake of some rather discouraging macro-economic data, showing no further fall in unemployment in the latest reported month, and very disappointing results from INSEE's surveys of both producer and consumer confidence. It therefore came as something of a relief to note that the 209,341 car sales in May corresponds to a selling rate of over 2.25 mn units/year. Total sales in the first five months of the year are showing a rise of 4.2%, and the crude increase for May was 3.8%. So far, there is no reflection of the poor economic news in the data on incoming orders, any more than in the registrations data. The order intake in May was a little lower than last year, but this merely offset a slight rise in April. The order backlog looks healthy enough - not surprisingly, given the recent launch of such an important new model as the Peugeot 307.

The UK selling rate in May was identical to that in April, at 2.3 mn units/year, but a little below the average for the year to date, which had been swelled by the exceptionally strong March result. The pattern of large rises in private sales more than offsetting declines in fleet sales has continued. However, the year-on-year rise in private sales was substantially lower in May, at 12% compared with 19% in the four previous months, and the decline in business and fleet sales was also smaller, at 5% in May compared to 9% in the four previous months. Despite sluggish economic growth and a continuing competitiveness problem affecting manufacturing industry, consumer confidence has been relatively well maintained, though it has been drifting slightly downwards since reaching its recent peak in March.

ANFIA's press release on the Italian market has a very upbeat tone, but we found the provisional May figure of 234,500 slightly disappointing. UNRAE's press release points out that the election may have disrupted the normal flow of sales, and in this light the result is certainly no cause for alarm. It translates into a SAAR of 2.2 mn units/year, which is considerably below the results for the earlier months of the year. Total sales during the first five months of the year are reported by ANFIA as being down by 1.7%. We estimate a slightly smaller decline of 0.8% (we have a different method of estimating the future revisions that will be made by the Motorizzazione, which continues to revise monthly registrations numbers - normally upwards - in its database for up to a year). Even if May was a little disappointing, the average selling rate of the first five months remains exactly in line with last year's total sales of 2.4 mn units. In addition, the inflow of new orders in May remained strong. The backlog of unfilled orders is now higher than it was a year ago, suggesting that the selling rate will be stable in the immediate future. In brief, the Italian market remains one of the strong points in the West European scene. UNRAE comments that June sales will "certainly" be higher than last June's. We agree with their thinking (though we are always a little nervous about using the word "certainly" in the context of statements about the future).


"The UK selling rate in May was identical to that in April"

Spanish sales of cars and off-road vehicles totalled 142,782 units in May, a rise of 5.2% compared to last May. Total sales in the first five months are down by just 0.3%. The May result was perhaps not quite as good as it looks at first glance, even though, as the ANFAC press release points out, it is a record for the month of May. It translates into a selling rate of just 1.4 mn units/year, below the average for the first five months of 1.5 mn units/year, and even further below the excellent April selling rate. On the positive side, it was once again private buyers, rather than rental companies, that contributed most of the increase. A tentative conclusion from the May figure could be that the impetus from the changes to the incentive scheme, which boosted demand from the start of this year, is now beginning to fade a little. The selling rate in May has more in common with what we were seeing in the closing months of last year than with the strong selling rates of the previous months.

Among the smaller countries, Sweden continues to post large declines on a year-on-year comparison - the May result was down 22.5% on this measure. However, demand now appears to have stabilised: in terms of the SAAR, the May result represents a continuation of the rate of approximately 250,000 units/year that we have seen each month this year. The same applies to Norway, the Netherlands and Finland: a significant decline on the year-on-year comparison but stability of the selling rate compared with the immediately foregoing months. In Belgium, the May result was down 9.9% year-on-year, but continued the steady improvement in the monthly selling rates from a low point in January.

\sgf
Sales (units)
Selling rate (Units/year)
\sgb
May 2001
May 2000
Percent change
Jan-May 2001
Jan-May 2000
Percent change
May 2001
Jan-May 2001
Year 2000
Percent change
WESTERN EUROPE
1,408,049
1,451,436
-3.0%
6,799,285
7,033,272
-3.3%
14,641,008
14,645,807
14,941,464
-2.0%
AUSTRIA
30,993
32,672
-5.1%
143,873
150,925
-4.7%
301,882
293,613
309,427
-5.1%
BELGIUM
45,980
51,029
-9.9%
243,690
281,041
-13.3%
524,428
472,645
515,204
-8.3%
DENMARK
10,811
11,566
-6.5%
41,736
53,314
-21.7%
94,291
89,877
113,179
-20.6%
FINLAND
11,415
15,008
-23.9%
51,686
68,266
-24.3%
110,384
105,559
134,660
-21.6%
FRANCE
203,941
196,549
3.8%
983,563
944,004
4.2%
2,269,952
2,199,000
2,134,120
3.0%
GERMANY
322,500
351,647
-8.3%
1,451,929
1,520,761
-4.5%
3,566,481
3,303,761
3,378,343
-2.2%
GREECE
28,780
27,989
2.8%
131,317
139,506
-5.9%
284,399
274,122
290,222
-5.5%
IRELAND
21,709
27,041
-19.7%
118,231
156,918
-24.7%
180,356
184,172
231,010
-20.3%
ITALY
234,500
237,170
-1.1%
1,208,042
1,218,176
-0.8%
2,173,959
2,441,429
2,429,070
0.5%
LUXEMBOURG
4,140
4,430
-6.5%
21,282
21,861
-2.6%
40,981
40,413
41,449
-2.5%
NETHERLANDS
51,300
58,123
-11.7%
263,546
322,379
-18.2%
493,814
497,564
597,628
-16.7%
NORWAY
8,671
9,871
-12.2%
38,634
44,265
-12.7%
88,645
91,271
97,376
-6.3%
PORTUGAL
27,796
25,697
8.2%
115,700
132,118
-12.4%
281,311
254,184
289,941
-12.3%
SPAIN
142,782
135,708
5.2%
654,002
656,163
-0.3%
1,371,249
1,497,822
1,472,146
1.7%
SWEDEN
25,081
32,354
-22.5%
106,203
123,528
-14.0%
250,509
249,679
290,529
-14.1%
SWITZERLAND
34,030
33,469
1.7%
141,152
142,955
-1.3%
312,993
310,513
314,482
-1.3%
UK
203,619
201,113
1.2%
1,084,698
1,057,092
2.6%
2,295,376
2,340,182
2,302,678
1.6%
Notes: Austria, Denmark, Ireland, Luxembourg, Switzerland: latest month estimated by LMC
Italy: latest month provisional estimate by Motorizzazione, previous months based on estimate of eventual revisions to Motorizzazione data
Netherlands, Germany: provisional estimate based on data excluding the final days of the latest month
Spain and Portugal: figures include sports utilities, which are reported separately from cars
UK: includes estimates for non-dealer sales
The percent change in the final column compares the average selling rate in the year-to-date with the last full year
The average of the seasonally adjusted selling rate for an entire year is by definition the total volume of sales in the year.


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