The West European car market in April continued to show a marked improvement in trend from the very disappointing levels seen in January and February, though it was not quite as strong as in March. We estimate the seasonally adjusted annualised selling rate at 14.8 mn, compared to the 14.9 mn in March. As the chart below shows, the five-month moving average of the SAAR – which is a reasonable indicator of the medium-term trend – has begun to point tentatively upwards once more, having declined continuously since the final quarter of 1999. This may be taken as evidence that the direct tax reductions that have been enjoyed by most West Europeans since the start of the year are beginning to feed through into a more stable level of car demand. That said, March has been the only month this year to match the average selling rate in 2000. April was a surprise-free month, in that all the major countries reported sales volumes which were closely in line with expectations. Insofar as there were surprises, it was Spain that produced the largest one, with a significant revival in sales to private individuals. With few special factors to report, we keep this month’s commentary brief.
In interpreting the results, it should be borne in mind that April 2001 had one extra selling (and data-processing) day compared to April 2000. The SAAR as reported by us takes account both of working day adjustments, and of seasonal factors.
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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.
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Indications are that German sales this month will come in at around 286,000 units. Because April last year produced a particularly poor figure, and because of the extra working day this year, the year-on-year comparison will come out as positive. But it would be silly to think that this signifies a turning point in German demand. The SAAR in April was a little worse than last month, at 3.2 mn compared to 3.25, though much better than the truly dire results in the first two months of the year. (March sales were confirmed at 356,000 units, fractionally better than the preliminary indication in our last report). The level of demand in Germany fell off one cliff between October 1999 (when it had been trending around a SAAR of 3.75 mn) and April 2000, and then stabilised at about 3.4 mn until October 2000, when it fell off another cliff. In recent months it has stabilised at around 3.2 mn, but the German industry will be deeply disappointed if it remains at this low level for much longer. The drop in German demand can be traced specifically back to private, rather than corporate buyers, and within this group it has been the younger buyers who have dropped out of the market in large numbers (which helps to explain why premium marques have been largely immune to the decline in demand). We hope to publish a more detailed analysis of this phenomenon on our website shortly.
“the French market continues to be very strong“ |
France is turning out to be the locomotive of Western Europe in the field of car sales, just as it is in a broader macro-economic sense. If any of last month’s numbers produced a pleasant surprise, it was the one from France. The 201,358 sales represented a rise of 8.7%, much more than can be put down to the extra working day, and brought the cumulative year-to-date increase to 4.3%. We estimate the SAAR in April at 2.2 mn units/year, well above last year’s out-turn. Because we have only limited experience of the new seasonality in France since the ending of the millesime, we continue to tweak our estimates of the seasonal factors for France, and it is this that has slightly reduced our estimate of the West European SAAR in March from 15.0 mn to 14.9 mn. What is not in question is that the French market continues to be very strong, showing not the least sign of the afflictions that have hit the German market in the last couple of years.
The UK also produced a strong result, with sales to private buyers through UK dealers up 18% year-on-year, though fleet sales continued to decline. The SAAR in March had been at the spectacular level of 2.4 mn units/year; the April figure represents a still-strong selling rate of 2.3 mn units/year, very close to last year’s out-turn. For an economy that has been showing very distinct signs of anaemia (with GDP growth running at annualised rates of under 2% in each of the last two quarters) these are very strong results, reminiscent of the way in which US sales remained strong even after the economy weakened.
The Italian market remains rock-solid, with selling rates slightly in advance of last year’s 2.4 mn units. April’s 218,100 preliminary estimate from ANFIA suggests a rise of 1.9% on last year, though this turns negative when adjusted for selling days. But April last year had been outstandingly strong, so this is nothing to worry about. The selling rate last month was 2.55 mn units/year, very much the same as it had been in March, and better than in January or February. The order inflow in April also remained strong, leaving a still-ample bank of orders to sustain registrations data in the immediately coming months.
“Spanish sales have exceeded expectations“ |
Spanish sales of cars and off-road vehicles, at 129,333 units in April, were virtually unchanged from the previous year’s volume, which itself had been exceptionally strong. Although this is not the first month this year in which Spanish sales have exceeded expectations, in the two previous months the strength of total sales owed a great deal to sales to rental companies. According to ANFAC, “sales to buyers other than rental companies showed a 3.1% increase in April, reversing the negative trend of recent months”. The amendments to the PREVER incentivisation plan that were made at the start of the year (with the goal of helping large families to buy cars, and promoting the scrapping of cars running on leaded petrol) appear to have had a rather substantial effect on demand, offsetting the distinctly more subdued tone of Spanish household spending generally.
The Scandinavian countries are among those where recent news has been negative. The selling rate in Sweden suddenly declined last October from 300,000 units/year, and has now fallen to only 250,000 units/year in April. Sales in the first four months are 11% down, although the economy continues to grow, if not as fast as last year, certainly at a respectable rate. Similar changes have been going on in Finland. One expert observer has attributed the abrupt decline in car demand in these countries to the equally abrupt saturation of mobile telephone markets, in which they have a dominant role. Portuguese car sales continue to reflect the flagging economy, and SUV sales are still minimal after the tax increase. Belgian demand has stabilised at a selling rate of just under 470,000 units/year in the last six months, but this is well below the year-earlier level. Dutch demand has been subdued throughout this year.
Oxford, May 8th 2001.
To view related research reports, please follow the links below:- Global Car Forecasts to 2005 |
