West Europe’s car market in February was back on trend after a couple of erratic months. The SAAR (seasonally adjusted annualised selling rate) has come in at 14.5 mn units/year, which is intermediate between the previous two months – December had been notably strong, January notably weak. However, taking recent months as a whole, there is still no convincing sign that the downward trend in the selling rate has been reversed. As can be seen from the chart, the 14.5 mn selling rate is exactly in line with the recent trend, which is noticeably downward-sloping. February had one fewer working day than last year (which of course was a leap year), so the year-to-year comparison will look a little more depressing than is actually justified by the numbers.

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.

German sales in January were 242,242, close to the preliminary estimate. Preliminary information suggests that the February number also looks likely to be very similar. In both cases, these remain very disappointing numbers. The February one translates to a SAAR of 3.2 mn units/year, which is rather better than in January, but still markedly below last year’s 3.38 mn out-turn. (It also represents a decline of 30,000 units, or 11%, on last February’s result). The selling rate continues well below trend, even bearing in mind the rather negative economic news that has been coming out of Germany in the last couple of months. Indications concerning incoming orders do not suggest that an upturn is imminent.

“Indications concerning incoming orders do not suggest that an upturn is imminent.”

The French result was a marked improvement on what had been a rather disappointing January result. The 177,452 cars sold represented a decline of 2.3% on the same month of last year, but this becomes a rise of 2.6% when adjusted for the number of working days. During the second half of last year, the selling rate in France was between 2 and 2.1 mn units/year, a noticeable decline from the 2.2 mn selling rate in the first half of the year. However, the February selling rate was almost back up to the 2.2 mn unit/year level. The CCFA comments that results for “the start of 2001 are entirely in line with forecasts of growth for the year as a whole”. In our view, there is still too much uncertainty about how the seasonal pattern of sales will evolve this year for that statement to be wholly justifiable; but it is a defensible point of view.

February in the UK is relatively insignificant, in absolute terms, and was also in line with recent trends. The 79,151 cars sold through dealers represented a 7% rise on the same month of last year, even without taking into account the reduced number of selling days. The seasonally-adjusted selling rate, including an estimated allowance for vehicles sold by other methods, remained at 2.3 mn units/year, exactly in line both with last year’s out-turn, and with the January selling rate. Once again, it was the private sales that were responsible for most of the year-on-year growth, with a 15% increase, though fleet sales also inched ahead. However, all eyes will be on the March figure, which in absolute volume could be almost five times larger.

“Spanish sales were considerably better than the recent trend had suggested.”

The results for Italy were solid and surprise-free. The selling rate remained just under 2.4 mn units/year, a little lower than last year’s out-turn, and close to the selling rate that had been seen in January. Sales volume in February was down by 7.9% year-on-year, which becomes a decline of 3.5% adjusted for working days. The volume of incoming orders fell by slightly more than the number of new sales, but the trend in order intake is still reasonably robust, and does not suggest any major surprises for registrations figures in the immediate future. The positive trend in the Italian data is in line with recently published data that show that both economic growth, and consumer spending, had been performing more strongly than had been expected during the final quarter of last year, and they suggest that these conditions are persisting into the current quarter.

Spanish sales were considerably better than the recent trend had suggested. They were almost flat on a working-day-adjusted basis, and represented a seasonally-adjusted selling rate of 1.55 mn units/year, substantially higher than any month since last September. However, much of this result was due to high sales to rental companies. ANFAC comments that their provisional estimates suggest that these sales may have risen by 35%, while private sales fell by 7-8%. This suggests that the February selling rate may be hard to sustain. In Portugal, recent changes in taxes on sports utility vehicles led to a large pull-forward of purchases into the closing months of last year, and some of these were also registered in January. In February, sales of these vehicles collapsed from 2,500 last year to just 62, pulling down the overall results. Sales in Belgium and Holland continued to drift slightly lower.

Oxford, March 6th 2001.