17 June 2020
Despite coronavirus (COVID-19) lockdown measures easing across Europe and dealers reopening, new-car registrations in the EU fell 52% year-on-year in May, according to figures released by the European Automobile Manufacturers’ Association (ACEA) . The volume of new-car registrations fell from 1,217,259 units in May 2019 to 581,161 in May 2020. This follows a 76% market contraction in April but the recovery is now underway across the region.
All 27 EU markets contracted last month and among the big 4, the volume of registrations halved in France, Italy and Germany, in line with the EU-wide downturn. Dealerships began reopening in Germany in April, from 4 May in Italy and from 11 May in France and Spain.
However, 73% fewer new cars were registered in Spain in May 2020 than in May 2019. There has been a phased approach to relaxing the lockdown measures in the country, which largely explains why the new-car market did not perform as well as the other major EU markets. These phases are also not applied nationally or regionally, but at a county and island level.
During the first phase (phase 0), dealers could reopen if they are smaller than 400 square metres and have already implemented new health and safety protocols. In the next phase (phase 1), all dealers could reopen as long as they adhere to the health and safety protocols. Phase 1 started in most counties on 11 May, but not all. ‘Many areas remained on phase 0. This was the case in Madrid and Barcelona, where many dealers are concentrated.’ commented Ana Azofra, valuations and insights manager of Autovista Group in Spain.
In the smaller EU member states, year-on-year contractions of more than 70% were reported in the new-car markets of Croatia, Ireland and Portugal. Numerous markets were far more resilient, with downturns of less than 40% reported in Austria, Belgium, Cyprus and Slovenia.
Year-to-date registrations down over 40%
In the first five months of 2020, registrations of new cars in the EU fell by 41.5% as the impact of the COVID-19 pandemic on the May figures slightly expanded the 38.5% contraction in the first four months. The greatest loss among the major markets was in Spain, where the market has contracted by 54% in the year-to-date, second only to Croatia (down 56%). The EU market downturn was, however, compounded by a combination of tax changes introduced in some EU member states, which pulled demand forward into December 2019.
New-car registrations, year-on-year % change, May 2020 and year-to-date (YTD) 2020
Source: Autovista Group based on ACEA data
As dealer activity returns in EU markets affected by lockdowns, a period of recovery is expected in the short term as the backlog is cleared and pent-up demand is released. Some markets may even enjoy year-on-year growth in new-car registrations in June and/or July.
Beyond the immediate clearance of the backlog and the release of pent-up demand, however, the economic impact will broadly dictate whether markets return to pre-crisis levels. There are also positive and negative side effects of the COVID-19 crisis to consider, such as an aversion to public transport and increased working from home.
EU figures benefit from UK exclusion
Following the UK’s departure from the EU on 31 Jaunary 2020, the UK is no longer included in the EU new-car registration figures reported by ACEA. The country suffered the biggest loss in new-car registrations in Europe in May, with volumes down 89%. Consequently, if the UK was still included in the figures, the new-car market in the EU would have contracted by 57% in May and 43% in the year-to-date. This was expected as dealers could not reopen in England until 1 June and until 8 June in Northern Ireland, with Scotland and Wales expected to follow imminently.
As in other markets, a major surge in registrations is not expected after weeks of dealer inactivity. There are also growing concerns about supply shortages in the UK, at least in the short term. ‘There are cars in or about to enter the UK but getting them to dealers is difficult,’ commented Anthony Machin, head of content and product at Autovista Group’s Glass’s. ‘Logistics are not working at full potential yet. EVs will also be in short supply for new-car buyers in the UK.’
Among the leading carmakers, PSA Group, Fiat Chrysler Automobiles (FCA), Ford, Renault and Volkswagen Group (VW) suffered the greatest losses in EU new-car registrations in May, because of their exposure to the markets of Spain, Italy and France. Each OEM registered more than 50% fewer cars in the month.
Honda, Mazda, Nissan and BMW Group also suffered declines of more than 50% in EU new-car registrations in May. Mitsubishi was the most resilient manufacturer in the month, but even registrations of the Japanese brand fell by 42% across the EU. After Mitsubishi, Volvo, Jaguar Land Rover (JLR) and Hyundai also performed comparatively well, with losses of less than 50% in the month.
As Europe emerges from lockdown, manufacturers with a strong electric-vehicle portfolio are expected to perform better than those without as EV consumers are less likely to be tempted by used cars instead of new. This is because they tend to be less price-sensitive buyers but there is also limited availability of the latest electric models on the used-car market.