New-car registrations fall again across Europe in August

02 September 2020

2 September 2020

The automotive trade associations in France, Italy and Spain report that new-car registrations fell year-on-year in in August. This is despite the existence of government-backed incentives in all three countries. Autovista Group senior data journalist Neil King discusses the latest developments.

New-car registrations were 19.8% lower in France during August 2020 than in the same month in 2019, according to the latest data released by the CCFA, the French automotive industry association. This is a dramatic downturn following the 1.2% and 3.9% year-on-year growth in new-car registrations in the country in June and July respectively.

However, the result does not come as a complete surprise. Whereas the incentives introduced on 1 June for new battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs) remain, the additional bonus for trading in older cars for cleaner new and used cars was exhausted before the end of July. The scrappage scheme reached its 200,000-vehicle cap after just two months, although the Ministry of Ecological Transition did announce the replacement of the recovery scheme with a conversion bonus, which has been in effect since 3 August.

In Spain, 66,925 new cars were registered in August, 10.1% fewer than in August 2019 according to ANFAC, the Spanish vehicle manufacturers’ association. ‘The month, which had started with a positive rhythm, saw its sales progressively decrease and it has not allowed the good recovery data of July to be consolidated. August is always a month of lower sales, due to the holiday period, but this atypical year is also influenced by uncertainty due to the health and economic evolution of the coronavirus pandemic.,’ ANFAC commented.

New-car registrations, France, Italy and Spain, year-on-year percentage change, January to August 2020

FSI Sales recovery 2020

Source: CCFA, ANFIA, ANFAC

Italy in negative territory despite new incentive scheme

The market contractions in France and Spain follow three consecutive months of recovery as Europe emerged from coronavirus (COVID-19) lockdowns. In Italy, the year-on-year downturn in August reported by the industry association ANFIA, marks the fourth consecutive month of improvement in the fortunes of the new-car market. Nevertheless, the year-on-year decline, albeit of only 0.4%, is despite the new government incentives that came into effect at the beginning of August as part of the Decreto Rilancio (Relaunch Decree). Italian new-car registrations were 11% lower in July than in the same month last year. A key factor in Italy’s July decline is that consumers decided to hold off until the new government incentives kicked in.

This new scheme comes on top of the Ecobonus scheme, which subsidises cars producing less than 20g of CO2/km. Electric and hybrid vehicles can therefore benefit from up to €10,000 in incentives when scrapping an older vehicle.

€3,500 is now provided for scrapping vehicles that are at least 10 years old when buying a new Euro 6 vehicle with CO2 emissions up to 110g/km, and a price of up to €40,000. Dealers will put forward €2,000 towards the incentive, while the state provides €1,500. Without trading in an older model, the funds drop to €1,750.

Remaining optimistic

The end of the scrappage scheme in France, in conjunction with dissipating pent-up demand, means new-car registrations may not return to positive growth in the coming months. Spain invariably faces the same challenge but Raúl Morales, communications director of Faconauto, remains optimistic.

‘Despite the negative health performance of the pandemic and its strong impact on economic activity, registrations for the month of August confirm that the sector is evolving more favourably than expected. Showroom traffic has been good, with customers attracted by the opportunity that the Renove Plan represents and the attractive promotional effort that brands and dealers are making. In this way, it can be said that today the automotive industry is in a position to produce a “lever” effect in the rest of the productive sectors and in employment, as long as, facing the last four months of the year, policies to recover economic activity and boost consumption continue to be implemented,’ Morales commented.

Tania Puche, communications director of the Spanish dealership association GANVAM, added; ‘in general terms, August is usually a slow month for registrations because purchases are advanced to roll the car on the vacation trip. This year is especially atypical because it also adds that the outbreaks of the coronavirus undermine the confidence of companies and consumers due to the fear of new restrictions, which affects demand. That's why it's so important to build that trust.’

There is similar positivity in Italy, despite the modest downturn in the new-car market in August. ‘For the first time since the beginning of the year, in August the Italian car market remains substantially stable after the heavy double-digit drops recorded for five consecutive months, from March to July,’ said Paolo Scudieri, president of ANFIA. ‘This is certainly a first positive sign and hope for a gradual recovery of the automotive sector, with market results gradually improving from now to the end of the year.’

The key to recovery of new-car markets ultimately revolves around countries agreeing budgets for 2021, and improving economic certainty and consumer confidence to boost spending. Clarity on the allocation of aid resources provided by the European Recovery fund, agreed on 21 July, will therefore also play a pivotal role in shaping the forward outlook for Europe’s new-car markets.