On the face of things, last month’s meteoric 87.3% rise in new-car registrations across the European Union (EU) would normally be cause for celebration. But this is compared to March 2020, when the region first began to feel the weight of the pandemic. Against this extremely low bar, March 2021 is simply the flagbearer of an enormously distorted reporting period.
According to the European Automobile Manufacturers Association (ACEA), a total of 1,062,446 new passenger cars were registered in the EU last month, compared with 567,253 in 2020. However, when compared with March 2019, a period of relatively greater stability, 1,264,388 new cars were registered in the EU (excluding the UK), equating to a decline of 16%.
Continued COVID impact
Significant year-on-year increases were recorded across the big four markets last month, particularly in Italy (497.2%), France (191.7%), and Spain (128%). Germany saw a more modest increase of 35.9%. But it did see a smaller decline of 37.7% in March 2020, while Italy, France and Spain posted losses of 85.4%, 72.2%, and 69.3% respectively.
The key reason for Italy’s especially inflated growth, with only 169,684 units registered last month, was that it locked down ahead of other EU countries in March 2020. Previously, the market has endured five straight months of declines, with a 9.5% increase back in September 2020, thanks to a government scrappage scheme. While these incentives were exhausted, a new scheme aiming to renew the Italian vehicle fleet with less polluting and safer cars was introduced at the start of 2021.
In France, 182,774 passenger cars were registered in March 2021, compared to 62,668 in 2020. The country announced the closure of non-essential retail stores last month in an effort to combat increasing infection rates. But, on the upside, dealerships are allowed to remain open, albeit by appointment only.
While the Spanish economy continues to suffer from a lack of tourism, a new source of optimism was recently introduced to stimulate consumer confidence in electrically-chargeable vehicles (EVs). Replacing the MOVES II scheme, MOVES III was introduced on 10 April. While this did not impact Spain’s registration numbers in March, it can be expected to influence next month’s figures.
Germany saw 292,349 new cars registered last month, up from the 215,119 moved in March 2020. But the extent to which the country recovers is in question as lockdown measures were extended to 18 April following a spike in infection cases. Now, Chancellor Angela Merkel is seeking to change the country’s lockdown laws to allow federal authorities the ability to enforce restrictions, even if individual states resist them.
All but one of the ACEA-recorded EU member states saw an increase last month, which was the Netherlands, down 18% year on year to 24,186 units. As can be seen in the map below, the only other Western European market to decline in March was Iceland at 11.2%, selling 957 new cars. Of the countries that did see increases, all were in the double-digit range or above - except Hungary, which saw smaller growth of 8.3% with 12,434 registrations.
During Q1 2021, EU demand for new cars grew by 3.2% to 2,560,330 units. ‘Despite steep declines during the first two months of the year (-24.0% in January and -19.3% in February), March’s strong results managed to offset the negative trend,’ ACEA explained. Considering the major EU markets, March’s gains pushed the cumulative performances of Italy (up 28.7% with 446,978 registrations) and France (up 21.1% with 441,791 registrations) into positive territory.
Meanwhile, both Spain (down 14.9% with 186,061 registrations) and Germany (down 6.4% with 656,452 registrations) have continued to post declines so far this year. Although, ACEA points out that this is ‘significantly less dramatic than in the preceding months.’ Meanwhile, Sweden recorded the best performance in Q1 2021, up 37.4% year on year with 90,870 registrations.
Looking forward, the EU still has a way to go on its road to recovery as it continues to rollout vaccines. But as member states ease restrictions and more consumers get a shot in the arm, confidence will undoubtedly grow. So too will new-car orders and registrations, particularly as governments fork out for incentive schemes to encourage the adoption of EVs.
According to ACEA, the recovery of the EU new-car market will start with annual growth of 10% in 2021. A 10% increase equals 10.9 million new cars on EU roads in 2021, higher than the 9.9 million registered last year. However, that is still 16% down on 2019, the last full year of non-COVID-19 impacted sales.
Supported by the incentives, until at least the end of June, and assuming there are no restrictions on dealerships, Autovista Group forecasts that the Italian new-car market will grow by 17% to over 1.6 million units. This is a higher rate than in France, but Italy starts from a weaker base, with registrations down 28% in 2020. Meanwhile, in Germany, Autovista Group forecasts the market will recover to 3.12 million units in 2021, 7% up on 2020.
The Spanish market is expected to continue to struggle without an uptick in tourism, even with the new incentives scheme, which is unlikely to significantly improve the fortunes of Spain’s new-car market. Autovista Group currently forecasts demand will recover from the 32% loss in 2020, albeit by only 6% to some 900,000 units in 2021.