Global Insight Perspective | |
Significance | Sales of new cars increased in Italy and France in September, while the Spanish market continued its poor performance in the month. |
Implications | The reintroduction of the scrappage scheme continues to boost Italian new car sales, while in France the market seems to have stabilised. In Spain, however, the poor performance of the Plan Prever does not provide any positive effect. |
Outlook | Italy is expected to continue its growth on the back of the scrappage scheme and new models, while Spain, despite factors like tax and legislation changes and new model launches later in 2007, should see a slight fall on the previous year. In France, following the strong recovery of the French automobile market in July that eliminated the poor performance in sales since the beginning of the year, it would seem that the French market is stabilising. |
New car registrations in Italy increased by just 0.2% year-on-year (y/y) in September, totalling 184,774, according to data published by the industry body ANFIA. In the year-to-date (YTD), the market saw an increase to 1,922,938 units from 1,803,182 in the same month of the last year, up by 6.4% y/y. With 57,510 vehicles sold in September 2007, the Fiat Group took a market share of 31.1%, which is better than the 30.5% of market share registered in September 2006. The Fiat brand sold 45,000 vehicles in September, which represents an increase of 3.5% over the same period of the last year. Among the main Fiat Group brands Lancia also saw a rise in registrations in the month, of 2.7% y/y, or to 7,428, while Alfa Romeo reported a sales decline of 9.9% y/y, down to 5,008 units sold in September. With regards to foreign brands, Ford was the best selling marque in Italy in the month of September, taking a market share of 7.6% with 14,067 units sold, up by 4.7% y/y. The U.S. brand was followed by Germany's Opel and Volkswagen (VW), which both took 6.3% of the market, with 11,675 and 11,608 units sold respectively.
With 148,214 registrations recorded in September 2007, the French market for new passenger cars grew by 3.2 % (raw data) and by 8.3 % for an identical amount of like-for-like working days compared to September 2006. It is important to note that after their poor performances this summer, the French brands have bounced back to hold 56% market share in September. The top ten models sold in the country were all French. In fact, with 1,523,411 registrations recorded from January to September 2007 for new passenger cars, the market for new passenger cars has stabilised at +0.3% for an identical amount of working days compared to the same period in 2006. With 34,398 vehicles sold, up by 1.9% y/y, Renault was the best-selling brand, taking a market share of 23.2%. It was followed by Peugeot and Citroën, with 27,839 and 20,681 registrations respectively.
In Spain, new car registrations fell to 96,751, which represents a decrease of 7.7% y/y, according to Spain's automotive association ANFAC. During the first nine months of the year, sales of cars totalled 1.21 million units, or down by 2% when compared to the same period of the last year. Private sales and company vehicles saw a declining trend in the January-to-September period, with registrations falling by 6.8% and 2.9% y/y respectively. Sales to car rental companies fell by 26.1% y/y in September, however, in the YTD period, the sector was still up by 3.6% y/y. During the first nine months of the year, Citroën was the best-performing brand with 119,174 registrations, down by 0.3% y/y, followed by Ford and Skoda. 72% of all cars were equipped with a diesel engine, with the remaining 28% accounting for petrol versions.
Outlook and Implications
September 2007 had one fewer working day when compared to the same month of the last year. Therefore, when adjusted to the same number of working days, new car registrations in September increased by over 5% y/y. September also represents the ninth consecutive rise so far this year. The Italian market has been continuing the positive trend set at the beginning of the new year, which is mainly due to the introduction of the new scrappage scheme in January this year (see Italy: 11 January 2007: New Italian Scrappage Scheme to Boost Market in 2007). The tax breaks introduced in January by the Italian government have also given a boost to Fiat because it makes mostly small cars with engines that pollute less than the bigger models made by its rivals. The boost comes at a pivotal moment for Fiat as it aims to consolidate the turnaround achieved under the chief executive (CEO) Sergio Marchionne through a revived model line-up, cost cuts and asset sales. Earlier this year, Fiat launched the Bravo, its first major new model in 17 months. The Bravo is positioned in a segment of the market in which Fiat has struggled in the past, with the Italian company improving its presence in various segments, especially in that of city cars. At the beginning of July, the Italian brand launched its new mini 500 model, performance of which has outstripped Fiat's expectations and helped the Italian auto manufacturer increase its market share (see Italy: 21 March 2007: Fiat Targets 10% Market Share After 500 Launch; Poland: 26 July 2007: Fiat to Raise Output of 500 Model in Poland and Italy: 30 August 2007: Fiat Says New 500 Model Order Book Has Grown to 70,000). Global Insight expects the Italian passenger car market to rise by 5.9% y/y this year to a total of 2.49 million units.
After a remarkable July, (+21% in raw data and +10% for like-for-like working days), followed by a slightly weaker month of August, down by 2.4 %, the French automobile market seems to have stabilised and has eliminated the poor start to the year. With the launch of the 107/C1 duet, followed by the new Clio, new Peugeot 207 and Citroën C4 Picasso, French manufacturers are getting back into a strong position to take advantage of the changing structure of the market. Renault will be banking on the arrival of the Twingo II and Laguna III in the second part of the year to boost sales further while Peugeot looks forward to launching the 307 replacement after the summer and Citroën will hope that the C4 Picasso and C-Crosser can compensate for weak sales of its C2 and C4 models. In general terms, the apparent lack of supply that defaulted the French market in the past is gradually being corrected. Global Insight forecasts French car sales to achieve about the same number as the last year.
Rising interest rates in the Eurozone have been blamed for the fall in car sales in Spain, where household debt continues to be high. The renewal of the Plan Prever scrappage scheme in 2007 does not seem to have provided the kind of stimulus required to spur growth in the sluggish new car market (see Spain: 15 January 2007: Spanish Government Extends Plan Prever to 2007). September's registrations continued the negative trend of the past months, fuelled further by low consumer confidence and high interest rates. With a number of tax and legislation changes occurring in Spain, and in light of the intense competition in the country, as well as the launch of some new models later in 2007, the market may recover somewhat towards the end of the year. However, Global Insight forecasts car sales to drop 2.4% this year as higher Eurozone interest rates put the squeeze on consumer finance loans and domestic demand.