Data released by JD Power shows the May car market in Europe up 10% over the same period of last year. The analyst and forecaster said that although an extra selling day this year helped, the result also indicates continued improvement in some markets – most notably Germany and Italy.
Summary
- Car sales grew by over 10% in May year on year — at the same time seasonally adjusted annualised sales bettered previous months also as the selling rate hit 14.7 mn units/year.
- The German and Italian markets weighed in with large gains in May, boosting the West European total significantly.
- The French, Spanish and UK markets all showed stability in seasonally adjusted terms. The UK market may be reaching the bottom of a shallow downturn.
The market moved up a gear in May as sales in Italy and Germany — hardly locomotives of growth in recent years — continued to show an improvement. The additional selling day will have helped, but the result clearly defines a real improvement in these markets. In year-on-year terms the Italian market eclipsed all others, though this very positive comparison benefits from the profound weakness in May 2005, rather than explosive growth this year. The German market gains appear to be more durable backed as they are by improving consumer (and business) survey findings. The UK market continues to bottom out while pauses are apparent in Spain and France. A gain in sales of approaching 1% appears to be a possibility for this year.
West European Car Sales
The chart 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. There was one more selling day in April, compared with the previous year.
click table to enlarge |
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By GlobalData
The German market was a major bright spot during May backing up the improving survey data with a solid gain in car sales in both year-on-year terms and also when viewed in seasonally adjusted terms. The selling rate rose to 3.5 mn units/year while rising by 9% in year-on-year terms (at the first estimate). The outlook for the remainder of this year remains rather good with a VAT increase likely to produce a rush in sales in the latter part of the year.
UK sales were broadly level (+1%) with May of 2005 marking the first month of this year in which sales did not fall. This could be the first indicator that the market might be reaching the bottom of a rather shallow downturn, though a recovery call would probably be premature: consumer confidence continues to waver while spending projections show only a small gain this year. As a result of declines that have already taken place, we continue to expect a fall of between 4% and 5% for full-year 2006, despite our expectation that stability will now continue.
May marked another solid month for the Italian market as the selling rate shifted up a gear from a lacklustre April result. The huge year-on-year uplift in May is, however, more a result of the appallingly low May 2005 figure than a genuine surge this year. Incoming orders showed some improvement indicating that the market may have some short-term firmness, and consumer confidence continues to hold up reasonably well. The outlook for this year is thus becoming more positive, with a small increase in demand now expected. Longer-term macro-economic concerns remain of course.
The French car market continued to show signs of weakness with sales now down by over 2% on the year to date. Consumer confidence remains sluggish though consumer spending growth should begin to improve towards the end of the year. This is expected to have a stabilising impact on car sales though we retain the forecast that the market will not grow in 2006, compared with 2005.
Spanish car demand remains at historically high levels, though the market is tracking slightly below year-earlier levels. A very small cooling for full-year 2006 is our expectation given the somewhat slower — though still healthy — rates of growth in key demand drivers, not least consumer spending. Confidence continues to slide, but there have been no dramatic shifts.
Among the smaller markets Belgium continues to shine while Portugal endured yet another poor result.
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