Germany and Italy slow the European new-car market recovery in June
15 July 2022
The volume of new-car registrations in the EU fell 15.4% last month, compared to June 2021, marking a modest deterioration compared to the 11.2% decline in May.
However, as there was one less working day in some EU member states, including France and Germany, than in June 2021, Autovista24 estimates that, on an adjusted basis, the contraction was about 13% last month.
This compares favourably to the working-day adjusted downturn of 19% in May, suggesting that the impact of pre-existing semiconductor shortages, and additional supply challenges caused by the war in Ukraine, is gradually lessening.
Nevertheless, fewer than 900,000 new cars were registered in the EU during June, according to figures released by the European Automobile Manufacturers’ Association (ACEA). Across the wider European region – encompassing the EU, UK, and EFTA markets of Iceland, Norway, and Switzerland – new-car registrations declined by 16.8% year on year, to below 1.1 million units. Adjusted for working days, the estimated fall of 13% is an improvement on the adjusted 20% fall in May.
Germany and Italy below expectations
Four of the five major European new-car markets suffered double-digit declines last month. France and Italy contracted by between 14% and 15% year on year, whereas registrations were 18.2% lower in Germany.
New-car registrations in the UK fell 24.3% last month, their greatest year-on-year decline since October 2021. However, there were two fewer working days than a year earlier due to the Queen’s Platinum Jubilee and adjusted for this, the downturn was far less dramatic than in May. Furthermore, the seasonally-adjusted annualised rate (SAAR) increased from 1.45 million units to 1.62 million.
Spain fared best among the big five European new-car markets, with a 7.8% year-on-year decline. This follows a 10.9% downturn in May, which is estimated at 19% when adjusted for the two extra working days compared to May 2021.
Spain and the UK were closely aligned with Autovista24’s expectations in June and France even exceeded the forecast, but Germany and Italy both performed below par.
The German automotive industry has been particularly hampered by the scarce availability of raw materials and critical components, which continues to impact the domestic market. The VDA, Germany’s association of the automotive industry, cautioned that additional shortages along the supply chain have not only been caused by the war in Ukraine, but also by renewed COVID-19-related lockdowns in China.
The 18.1% decrease in the German new-car market last month is steeper than Autovista24 anticipated but, adjusted for working days, the year-on-year downturn improved to -14.2% in June, from -18.7% in May. The seasonally-adjusted annualised rate (SAAR) similarly improved from 2.09 million units in May to 2.46 million in June.
Aside from inflationary and supply challenges, new-car sales have been restrained in Italy as consumers awaited the purchase incentives announced in April. As these were reinstated on 25 May, an improvement in registrations, especially of electric vehicles, is materialising, albeit slower than Autovista24 had factored into its forecast for June. Moreover, the purchase incentives ‘are already exhausted for the 61-135g/km CO2 range, where the greatest number of requests was concentrated,’ commented Paolo Scudieri, president of the Italian carmakers’ association ANFIA.
Most other European new-car markets suffered double-digit year-on-year declines in June, with the sharpest downturn, of 28.4%, in Croatia. Nevertheless, seven countries, including Spain, endured only single-digit year-on-year declines, and Iceland and Latvia enjoyed year-on-year growth.
European outlook lowered despite market improvements
In the first half of 2022, cumulative new-car registrations in the EU exceeded 4.6 million units, but this equates to a 14% downturn against the low base of comparison in 2021. Moreover, compared to the first half of pre-pandemic 2019, the EU new-car market has contracted by 33%.
Autovista24 assumes that supply bottlenecks will continue to ease throughout the year, but renewed lockdowns in China pose a threat to production. Although order books are full, inflationary pressure will compromise demand as consumers delay purchases. Accordingly, the forecast for EU new-car registrations has been modestly downgraded, to 9.47 million units, equating to a year-on-year contraction of 2.3%.
The outlooks for Germany, Italy, and Spain have been revised downwards. These are, however, tempered by an improvement in France, partly because of the extension of the existing incentives for electric vehicles until 31 December 2022.
The 3.1% growth forecast for the UK means the wider European region is expected to recover to almost 11.6 million units in 2022, equating to a decline of 1.6%. Nevertheless, this is a downgrade from the 1.1% contraction predicted in June, because of a revision to the UK outlook, which has been lowered by 8,000 units, as well as the reduced forecasts for mainland European markets.
The full interactive dashboard presents the latest and previous monthly forecasts for Europe’s five major markets for 2022, as well as the annual outlook to 2025.