January EU new-car registrations hit ‘new historic low’

17 February 2022

Fewer than 700,000 new cars were registered in the EU last month, according to figures released by the European Automobile Manufacturers’ Association (ACEA). This equates to a 6% decline compared to the low base of January 2021, when COVID-19 restrictions suppressed market activity.

The industry body notes the volume marks ‘a new historic low in EU car sales for the first month of the year.’ Furthermore, there was an additional working day across the EU last month and Autovista24 estimates that, on an adjusted basis, the contraction was about 10.5%.

Taxes and incentives

Volumes were 18.6% lower in France, because of tax changes introduced on 1 January. Italy declined similarly after the purchase incentives for electrically-chargeable vehicles (EVs) ran dry in November. Combined, registrations in these two markets were about 50,000 units lower than a year ago – more than the 44,000-unit deficit across the entire bloc.

Most EU markets suffered year-on-year declines, with the severest downturn of 28.9%, in Greece. Nevertheless, 10 member states reported year-on-year growth rates, six of which were in double digits – Austria, Bulgaria, Cyprus, Latvia, Romania, and Slovakia

Outside of the EU, both Iceland (52.7%) and the UK (27.5%) enjoyed phenomenal growth. Switzerland expanded by a mere 5.1% and Norway contracted by 22.8%. The increase in registrations in the UK, nudging 25,000 units, significantly contributed to the Europe-wide downturn being far less pronounced than in the EU, at just 2.4%.

Semiconductors to the rescue

Although COVID-19 continues to plague European markets, the pull-forward effect of the tax changes in France and Spain, in conjunction with ongoing supply shortages acutely impacted registrations volumes in January. And rising energy costs and broader inflationary pressure are squeezing household budgets too.

However, as France and Spain correct themselves and supply bottlenecks ease across the EU, especially in the second half of the year, the new-car market is expected to improve. Crucially, the pace of supply improvement, which will translate into shorter delivery times, will dictate the extent of the recovery. Similarly, further rises in inflation pose a threat, as does a potential deterioration in consumer confidence.

As it stands, Autovista24 assumes that the supply of semiconductors and, consequently cars, will gather pace in the second half of the year and underlying demand will not be significantly affected. Predicated on this assumption, the latest forecast calls for more than 10 million new cars to be registered in the EU in 2022, equating to year-on-year growth of 6.3%.

Autovista24 downgraded its forecasts for France, Spain, and Italy earlier this month, but the forecast for Germany is maintained, with the market expected to see the greatest growth among the major EU markets, at 10.5%.

The combined EFTA markets are forecast to expand at a similar rate as the EU in 2022, but the 15.1% growth forecast for the UK means the wider European region is expected to recover to about 12.7 million units in 2022, equating to growth of 7.6%.

Autovista24 will continue to monitor and report on key developments and revise market forecasts accordingly.