Germany and UK hamper recovery of European new-car market in May

16 June 2022

new-car registrations

The volume of new-car registrations in the EU fell 11.2% last month, compared to May 2021, suggesting a significant improvement on the 20.6% decline in April. However, as there were two more working days in most EU member states than in May 2021, Autovista24 estimates that, on an adjusted basis, the contraction was 19% last month.

This marks a deterioration on the adjusted 16.2% fall in April as pre-existing semiconductor shortages and additional supply challenges caused by the war in Ukraine impair vehicle deliveries.

Fewer than 800,000 new cars were registered in the EU during May, 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 12.5% year on year, to below 950,000 units. Adjusted for working days, the estimated fall of 20% marks a downturn on the adjusted 16% decline in April.

Germany and UK underperform

All five major European new-car markets suffered double-digit declines last month. France and Spain contracted by between 10% and 11% year on year, whereas registrations were 15% lower in Italy. Aside from inflationary and supply challenges, new-car sales were restrained in Italy as consumers awaited the purchase incentives announced in April, which were reintroduced on 25 May.

Nevertheless, all three markets were aligned with Autovista24’s expectations. The latest figures suggest that the supply situation may be slowly improving. The same cannot be said for Germany and the UK, however.

The downward trend in Germany continued into May, with 207,199 new cars registered – a drop of 10.2% compared to a year ago. This is in line with the year-on-year declines in France and Spain but adjusted for the two extra working days last month, the market fell 18.7% year on year, a slight deterioration on the adjusted 17.4% decline in April. Similarly, the seasonally-adjusted annualised rate (SAAR) fell slightly, to below 2.1 million units.

The UK new-car market declined by 20.6% last month, with 124,394 registrations. Moreover, on an adjusted basis, Autovista24 estimates that the year-on-year fall was 28.2%. This is a severe deterioration from the adjusted 11.4% downturn in April, with the SAAR receding from 1.8 million units to just 1.45 million units.

Most other European new-car markets suffered double-digit year-on-year declines in May, with the sharpest downturn, of 33.2%, in Lithuania. Nevertheless, six countries endured only single-digit year-on-year declines, and seven countries enjoyed year-on-year growth – Bulgaria, Cyprus, Greece, Iceland, Latvia, Romania, and Sweden.

Easing production disruption

In the first five months of 2022, cumulative new-car registrations in the EU surpassed 3.7 million units, 13.7% down on the low base of comparison in 2021.

Autovista24 assumes that the disruption to car production will reduce throughout the year as carmakers secure alternative supplies of critical raw materials and/or components currently sourced from Russia and/or Ukraine. Nevertheless, the forecast for EU new-car registrations has been modestly downgraded, to 9.51 million units, equating to a year-on-year contraction of 1.9%.

Aside from a subtle revision to the Spanish forecast, a 31,000-unit reduction to the German outlook for 2022 is behind the EU forecast downgrade this month. Further market corrections are expected in France and Spain as the negative effects of the tax changes dissipate. Italy will improve too following the reinstatement of EV incentives.

The EFTA markets of Iceland, Norway, and Switzerland are forecast to perform better than the EU in 2022. Moreover, the 3.6% growth forecast for the UK means the wider European region is expected to recover to 11.6 million units in 2022, equating to a decline of 1.1%. Nevertheless, this is a downgrade from the 0.6% contraction predicted in May, because of the revision to Germany - and the UK outlook, which has been lowered by 20,000 units.

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.