Strong overall growth in key Europe markets as BEV incentive questions linger

06 November 2023

Three of Europe’s biggest markets posted impressive double-digit new-car registration growth during October. This indicated a continued recovery, even with order backlogs from the supply-chain crisis all but cleared.

France, Spain, and Italy quietened speculation about potential market slowdowns with strong performances last month. Last year each country saw delayed deliveries finally make their way to customers following months of industry disruption. Now, the latest figures suggest buyers are returning to the automotive market.

Of the three, France experienced the best month, with new-car registrations up 21.9% year on year. Italy followed closely with figures improving 20%, while Spain was close behind with an 18.1% improvement.

The electric factor

While these figures show a recovering market, albeit with each below October 2019’s pre-COVID-19 numbers, there may be a slight distortion thanks to the potential ending of electric vehicle (EV) incentives.

All three markets recorded good growth in this sector, especially with battery-electric vehicles (BEVs). Yet the markets are awaiting details on potential incentive schemes for 2024, with the remodelling of existing bonuses likely.

With no updates yet, many buyers could take advantage of current schemes before their deadline. This may pull registrations forward, with a similar effect recently witnessed in Germany following the end of business incentives in the country.

Therefore, the growth in BEV registrations during October is positive, but a true picture of the market may be difficult to piece together in the coming months.

Hybrids lead in France

The French market saw new-car registrations increase 21.9% in October with 152,383 units, according to data from CCFA, marking the 14th consecutive month of growth. In the first 10 months of the year, France has seen registrations increase by 16.5%, with 1,441,007 cars delivered.

However, the country has changed how it reports fuel-type numbers, with a wider classification of hybrid models. This means the fuel-type data is slightly skewed when compared with previous months.

AAA Data, which provides a greater breakdown of registration numbers and market performance, is now including mild hybrids (MHEVs) alongside full hybrids (HEVs) and plug-in hybrids (PHEVs), boosting numbers for electrified vehicles.

This means that in October, total hybrid registrations led the market, with a 36% share. Registrations of hybrid vehicles increased by 38% in the month, to 55,414 units overall. Breaking down the share, HEVs remained the dominant hybrid type with 16% of deliveries, followed by PHEVs and MHEVs, with 10% each.

‘Hybrid powertrains meet the needs of consumers and can be considered as transitional before moving to all-electric. Furthermore, we must not forget that for the moment, hybrid cars help to limit the impact of the environmental penalty compared with purely internal-combustion engine models,’ commented Marie-Laure Nivot, head of automotive market analysis at AAA Data.

Petrol came in a close second, with 35% of the new-car market. The internal-combustion technology increased its registrations by 17% in October, with 54,076 units. Diesel dropped by 29%, with 11,888 units making up just 8% of the market.

BEVs, meanwhile, took 17% of the market in October, with registrations increasing by 51% to 25,472 units. With revisions to the country’s ecological bonus expected in mid-December, the country may be witnessing the start of a ‘pull-forward’ in registrations.

Buyers appear eager to get the maximum financial incentive available before the suggested amendments to the eco-scoring structure comes into force, which could result in fewer vehicles qualifying for grants. There has been no comment on changes to the amount of money available for BEV purchases, with the current rates likely to remain for the time being.

AAA Data also compiled an overview of how Chinese brands performed in the country last month. With a potential EU investigation into the impact of imports from China, the figures from France show mixed fortunes for brands hailing from the country. MG, owned by SAIC, is already one of the top-20 brands and increased its registrations by 93% last month, with 2,589 units. Lynk & Co delivered 279 hybrid models, while global market leader BYD struggled, with just 72 units in October.

Leapmotor also had a very slow month with just 33 registrations. However, the brand may benefit from a new partnership with Stellantis. The international group has invested €1.5 billion in the Chinese manufacturer, with the companies looking to establish the Leapmotor International joint venture.

‘As consolidation unfolds among the capable electric vehicles start-ups in China, it becomes increasingly apparent that a handful of efficient and agile new generation EV players, like Leapmotor, will come to dominate the mainstream segments in China,’ said Stellantis CEO Carlos Tavares. ‘We feel it is the perfect time to take a leading role in supporting the global expansion plans of Leapmotor, one of the most impressive new EV players who has a similar tech-first, entrepreneurial mindset to ours.’

Diesel declines but still beats Italy’s plug-in figures

The Italian market saw registrations increase by 20% in October, according to industry association ANFIA. Although there was one more working day than in October 2022, the market nevertheless saw 139,052 passenger cars take to its roads last month.

Just as in France, HEVs led the way in Italy during October, with a market share of 39% and growth of 29.3% year on year. The country also includes MHEVs in its hybrid figures but does not offer a break down between this technology and HEVs. Meanwhile, PHEV registrations declined 4.3% with a share of 4.2% in the month.

The internal-combustion engine is still a popular choice in Italy, however, with petrol registrations up 20.9%, taking a market share of 27.9%. Diesel technology had a bad month, with 3.3% fewer deliveries year on year, giving it a market share of 14.8%. Despite the decline, this performance means it took a bigger market share than that of PHEVs and BEVs.

All-electric vehicles have seen inconsistent growth in Italy, with 5,071 units registered in October. Yet sales increased by 57.2% in the month, a stronger performance than their decline in September. Italy is another country awaiting clarification on BEV incentives, with no details on plans to reshape financial aid.

In the year-to-date, Italy’s new-car market is up 20.5%. HEVs took 36% of the market, while petrol held 28.5%, and diesel came third with an 18% share, having increased its registrations in the 10 months of the year by 10%. PHEVs took a 4.5% share, while BEVs claimed just 3.9% of the market so far in 2023.

Strong BEV growth in Spain

Following a slower month in September, the Spanish market enjoyed more robust growth in October, with registration figures up 18.1% in the month. Automotive authority ANFAC reported 77,892 unit deliveries, saying it was ‘notable and greater growth than expected.’

The organisation has cited a decrease in the escalation of inflation in the country, together with a halt in rising interest rates and improvements in vehicle production capacities. Sales to private buyers increased by 22.2%, while company deliveries rose by 14.7%, and those to rental fleets increased by 12.7% in the month.

‘October closes with double-digit growth that improves forecasts,’ explained Félix García, director of communication and marketing at ANFAC. ‘With last month's figures we can think that if the growth rate is maintained in November and December, we could exceed 940,000 units. A figure that improves the disastrous 2022 where only 813,000 passenger cars were sold but which failed to overcome the barrier of one million units. 

‘Spain, due to its population and income level, must have an annual market above one million units to maintain employment in the automotive sector. We hope that a decision by the European Central Bank not to continue raising interest rates will also encourage private buyers to continue replacing their old vehicles with new ones and thus lower our average age of the fleet, which is already over 14 years old.’

Petrol was the top fuel type in Spain during October, with 28,174 units representing 36.2% of the market. Hybrids were close behind with 27,496 cars delivered, a 35.3% market share. These two fuel types are some way ahead of PHEVs, with a share of 6.41% thanks to registrations growth of 25.7%, or BEVs, with 6.5% of the market. Even diesel performed better than the plug-in sector during October, thanks to an 11.8% market share.

However, Spain also saw strong BEV growth in the month, with registrations rising 87.6% to 5,055 units. As with France and Italy, the country is waiting on confirmation of BEV incentives for 2024, with its current MOVES III plan set to end on 31 December 2023. This may impact BEV registrations in the coming months, with buyers looking to take advantage of the financial aid on offer before a potential reduction or end of the scheme.