The selling rate in November was little different from the year-to-date average, but under the surface they reflect the beginnings of some changes that have long been expected. The UK’s contribution to the total, which has recently been abnormally high, fell back: the selling rate in November was 100,000 units/year below the year-to-date average. Germany’s share of total European sales, which has been well below its long-term average, crept back up toward more normal levels. And the signs of weakness in the French market, which until recently has been fairly stable, became more obvious. Overall, the November results were perhaps disappointing, in the sense that they did not confirm the hints of an upturn in the results for the two previous months. However, they do confirm that volumes remain higher than when demand hit a low point in early summer.
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With one month to go, the cumulative year-on-year decline in car sales stands at 3.6%, and for light vehicles as a whole (including commercial vehicles under 6 tonnes gvw), at 3.7%. For the broader European market, comprising also the EU applicant countries (including Turkey), the cumulative decline remains at 3.3% for cars and 3.1% for light vehicles.
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 five-month moving average of these. We indicate the latest two months. The most recent numbers underlying this chart are appended in the table at the end of this note.
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German sales volumes continue to grow. We expect volumes of 271,000 units in November. The SAAR, on our estimation, was in excess of 3.5 mn units/year, for the first time this year, representing a major improvement from the 3.2 mn level that was typical in the first quarter. Final figures for October were also in line with this pattern of a rising trend. Of course, this improvement comes at a time of deteriorating economic conditions, and with consumer confidence having plummeted to a five-year low in November. The trend in incoming orders, which had been tending to improve, has also looking more fragile in the last couple of months, and the backlog of unfulfilled orders is now trending downwards.
The downward trend in the UK’s selling rate continued in November. The SAAR fell close to 2.5 mn units/year, which is low by comparison with the heady volumes of the last couple of years. In contrast to the rest of Europe, consumer confidence has remained high; in fact it has tended to improve as 2002 progressed. Vehicle affordability, as measured by the ratio of car prices to disposable income, has also dramatically improved in recent years. But the November figures suggest that the spike in car sales may now be receding into the past. Sales to the fleet and business sectors rose in November: over the year-to-date they have grown by 4.8% and 9.9% respectively. Diesel sales accounted for 27.1% of November sales.
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By GlobalDataThe 181,100 new car registrations estimated by the Italian transport ministry in November was an exceptionally strong outcome. The 2.4 mn unit/year selling rate that it represents compares to the average of 2.3 mn for the three preceding months. Although total Italian registrations will have fallen by just under 9% this year, this represents a first half year of steep decline, and a second half year of steep recovery. The strong result may have been due to consumers buying on the anticipation that the incentive package is due to expire at the end of December. However, the industry confidently expects that it will be renewed in the following year. Interestingly, the flow of incoming orders was rather weaker than in previous months, suggesting that the effect of the incentive package may be starting to wear off a little. Consumer confidence remained very weak in November, as it had been in October.
Of all the major markets, France produced the most disappointing result in November. The selling rate there was in gradual decline in the first half of the year, but a much steeper decline has set in during the second half of the year. This is in line with most economic indicators, including consumer confidence, which have been sending increasingly depressing signals over the last few months. The trend in incoming orders is no exception to this generalisation. Our estimate of the SAAR in November shows a level of only 2.0 mn cars/year.
Spain also produced a much lower selling rate than the last few months would have suggested. In addition, the data show that sales to rental companies were much stronger than other sales during November. Hence the decline in the underlying level of demand may be rather worse than our figures imply, since rental sales are volatile, and are often used to absorb imbalances between supply and demand.
Among the smaller countries, Portugal again produced a shockingly low figure, and there were warning notes in the data from Belgium, Greece and Norway.
Charles Young (cyoung@lmc.co.uk, +44-1865-791737)
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