European new car registrations contract by 7% in April

16 May 2017

According to the latest data released by the European Automobile Manufacturers Association (ACEA), the number of new passenger cars registered in Europe (comprising the European Union and EFTA) declined by 6.8% year on year in April. This equates to a drop of almost 90,000 new car registrations in April.

The 20% slump in demand in the UK as a result of the introduction of new vehicle excise duty (VED) rates accounted for over 37,000 units of the European decline in April, with registration volumes in Germany and France lower by 25,000 (down 8%) and 11,000 units (down 6%) respectively. Demand in Italy also contracted by 8,000 units (down 4.6%). Of the big 5 European markets, Spain alone enjoyed growth in April, albeit of just 1.1%.

The European market is not as weak as the data suggests, however, as Easter fell in April this year instead of March and this largely explains the contraction in many European markets. To put this into perspective, the loss of a single working day in a month equates to a 4% drop in sales and with the two Easter days falling in April, demand would have been expected to decline by 8% in the month even if it was running at a comparable level to 2016.

As a group, the 12 new member states that joined the EU since 2004 contributed positively to demand growth and helped to limit the regional decline to just 6.8%.

For the first four months of the year, demand for passenger cars in Europe has still enjoyed positive growth of 4.5% year on year. Despite the declines in April, the new car markets of France, Germany and even the UK have all expanded compared to the first four months of 2016. Aside from the concerns in the UK related to the Brexit vote and the VED tax hike, confidence remains positive across the eurozone and demand is broadly expected to enjoy another year of growth in 2017, albeit at a slower rate.

Volkswagen Group (VW) registered 9% fewer cars in April, with demand for the core VW brand down by 14% year on year. However, VW was not the only leading brand to suffer a double-digit decline in demand, with demand for Ford cars down 11.5% and the Opel/Vauxhall brands combined suffering a contraction of 13.1% ahead of the finalisation of their acquisition by the PSA Group. PSA Group’s own volumes suffered declines of 4.2% and 6.2% for Peugeot and Citroën respectively in April. Renault performed slightly better, with registrations down just 3.3%.

Almost every brand major suffered declining sales in light of the weaker demand in the region although the Toyota and Kia brands managed to increase sales by 5.4% and 8.1% respectively in April. However, the best performances were recorded by SEAT and Alfa Romeo, which enjoyed registrations growth of 15.4% and 52.2% respectively, buoyed by surging demand for their new Ateca and Stelvio SUV offerings.