January payback for December car-registrations surge in some EU markets

02 February 2022

Tax changes, rising COVID-19 cases, and supply constraints conspired to curtail new-car registrations in key EU markets in January, writes Autovista24 senior data journalist Neil King.

In France and Spain, there was an element of payback in January for the surge in registrations in December, which brought a poor second half to a close in 2021. The Spanish market managed to grow year on year, albeit by just 1%, but the volume was less than half of that achieved in December. New-car registrations in France and Italy endured double-digit year-on-year declines.

The shortage of semiconductors continues to constrain the supply of vehicles in all markets, but inflationary pressure and the rise of COVID-19 cases is impacting underlying demand too.

Spain’s unwanted record

A total of 42,377 new cars were registered in Spain during January, according to ANFAC, the Spanish vehicle manufacturers’ association. This is less than half the volume of cars registered in December, which was high due to pull-forward caused by a rise in registration taxes from 1 January 2022, although it still represents year-on-year growth of 1%.

However, ‘this growth is compared to a month in which the COVID-19 pandemic converged with the historic Filomena snowstorm, which had populations such as Madrid blocked for almost two weeks of the month,’ ANFAC emphasised. The association also acknowledged that ‘the data for January 2022 is better than its predecessor, but it is the second lowest in the historical series since 2000.’

'The fact that the comparison with the same month of the previous year is positive should not make us lose sight of the fact that the effects of the pandemic and the microchip crisis continue to wreak havoc on sales. For the second consecutive year, we started the year below 50,000 units, which is half the volume of monthly registrations that corresponds to our market based on the level of motorisation, population, and per-capita income,’ stressed Tania Puche, communications director of the automotive association GANVAM.

Furthermore, there was one more working day last month than in January 2021, the same as in France and Italy. On a like-for-like comparison, Autovista24 estimates that the Spanish market contracted by about 4% last month.

One million units in 2023

Given the pull-forward effect and negative impact of the registration-tax rise in January, as well as the ongoing economic and supply issues, Autovista24 has revised its forecast for Spain in 2022 down to 893,000 units, equating to year-on-year growth of 3.9%. Looking ahead to 2023, Autovista24 forecasts that the Spanish new-car market will grow by 12%, to around the one-million mark.

This sentiment is echoed by Puche: ‘Bearing in mind that the coming months will continue to be marked by the shortage of semiconductors and changes in the supply chain, we can classify 2022 as a year of transition because it will not be until 2023 when, in principle, we will exceed the barrier of one million units registered.’

France down 19% year on year

According to data released by Plateforme Automobile (PFA), the French automotive-industry body, 102,901 new cars were registered in the country in January, over 50,000 fewer than in December. This equates to a year-on-year contraction of 18.6% and is 31% lower than the average of 149,000 new cars registered in the month between 2010 and 2019. Furthermore, there was one more working day last month than in 2021. On an adjusted basis, Autovista24 calculates that the market fell by 22.5%.

In addition to ongoing challenges, and the reduction in French incentives for electrically-chargeable vehicles (EVs) since 1 July 2021, new regulations came into effect in France on 1 January. The malus (penalty) for registering cars with CO2 emissions of 128g/km or more has increased, up to a maximum of €40,000 for cars with emissions higher than 224g/km. This means that list prices of many new cars have artificially increased, pulling demand forward from January into the end of 2021.

‘OEMs are offering new cars with a lack of options due to the semiconductor crisis, which is also deterring customers from buying, even when the car itself is available,’ added Ludovic Percier, residual value and market analyst, Autovista Group France.

A further planned €1,000 reduction of EV incentives from 1 January 2022 has been postponed, with the subsidies remaining in place until the end of June 2022. However, the lower incentives will come into effect from 1 July 2022.

Downward revision

In the context of these latest developments, Autovista24 has revised its forecast for 2022 down to 4.7% growth year on year, to 1.74 million units. This is about 22% lower than the volume of cars registered in pre-crisis 2019, although the market is still forecast to expand by 10% year on year in 2023.

Negative trend in Italy could mean job risks

Industry association ANFIA has reported that 107,814 new cars were registered in Italy last month. Unlike France and Spain, due to their respective tax changes in January, the Italian tally was higher than in December, but this still marked a year-on-year contraction of 19.7%. As in France and Spain, there was an additional working day, compared to January 2021 and, on an adjusted basis, Autovista24 calculates that the market suffered a 23.7% decline.

‘Beyond the market results of this first month of 2022, continuing the strongly negative trend of the second half of 2021, I would like to highlight that the definition and launch of an industrial-policy plan, dedicated to the transition of the automotive supply chain, cannot be postponed any longer - a process that, if not properly managed, could cost our country more than 70,000 jobs,’ commented Paolo Scudieri, President of ANFIA.

In addition to supply constraints, rising raw-material costs, surging energy prices and the resurgence of COVID-19, the lack of EV incentives since November is hurting the Italian market.

‘In addition to industrial policy measures, there is also a need for structural measures to support demand for electrified cars and commercial vehicles with low environmental impact, in order to boost production and steer the purchasing decisions of consumers and businesses towards the decarbonisation of mobility objectives that are being defined at European level,’ Scudieri added. ‘Moreover, all the major EU countries are doing this, leaving us in last place in this challenging path,’ he concluded.

Assuming a reintroduction of incentives is not forthcoming, Autovista24 has reduced its forecast for 2022 down to 1.51 million units, equating to year-on-year growth of 3.5%. At this level, the market will be 19% smaller than in 2019. Registration volumes are forecast to expand by a further 10.5% in 2023, to 1.67 million registrations - 13% lower than in 2019.