Spanish, Italian passenger car markets record double-digit percentage gains in H1

Spain

The Spanish passenger car market has seen double-digit percentage growth rates in the first half of 2015, helped by growth in June underpinned by the eighth round of the Programa de Incentivos al Vehículo Eficiente (PIVE) scrapping incentive. Registrations during the month have grown by 23.5% year on year (y/y) to 111,333 units according to data published by Spanish trade association ANFAC. This has helped further maintain the momentum of the year to date (YTD), where registrations now stand at 555,222 units, an increase of 22.0% y/y.

On a brand basis, Volkswagen (VW) retained the top spot with 9,963 units, which was a y/y gain of 31.3%. This also resulted in it maintaining its leadership in the YTD, with registrations of 48,648 units, an increase of 15.1% y/y. During the month, Renault was exceptionally close behind VW with registrations of 9,907 units, an 8.5% y/y drop. Following behind were Opel, Ford and SEAT.

Despite declining in the month, Renault's Mégane was the top selling model followed by C-segment rivals the SEAT Leon and Citroën C4 (the latter also includes the C4 Cactus).

Italy

Gains continued in the Italian passenger car market during June, helping to maintain momentum in the YTD. according to the latest data published by trade association UNRAE, registrations have increased by 14.4% y/y to 146,682 units. This in turn has contributed to the gain in the YTD of 15.2% y/y to 872,951 units.

From a brand perspective, Fiat unsurprisingly led the way with registrations of 30,301 units, underpinned by an increase of 12.6% y/y. Its YTD sales reached 182,656 units, a gain of 13.4% y/y. It has been a positive month for the remainder of the brands that make up Fiat Chrysler Automobile (FCA). Lancia/Chrysler recorded an increase in registrations of 22.0% y/y to 5,699 units while Alfa Romeo was up in the month by 17.1% y/y to 2,835 units. However, the Jeep brand saw the biggest improvement with a quadrupling of registrations from 684 units to 2,799 units.

Following Fiat in the brand chart this month was VW in second place, as its registrations increased by 10.4% y/y to 11,294 units, and Ford took third place with registrations of 10,430 units with a gain of 16.3% y/y. However, Opel overtook Renault into fourth place as the French automaker recorded a decline of 10.5% y/y to 8,011 units.

Outlook and implications

This is now the 22nd month in succession that the Spanish passenger car market has recorded an increase in registrations. According to the trade association, registrations this month have been driven by both private customers and company car demand. The former category increased 25% y/y to 50,597 units, underpinned by the eighth round of the modified scrapping incentive that was rolled out in May (see Spain: 14 May 2015: Spanish government renews scrapping incentive for eighth and final round). However, it also added that improved economic indicators and credit availability have also improved matters. Sales of company cars had an even better month with a 41.5% y/y gain reported to 27,765 units, which has seen the market for such vehicles improve by a third during the first half. Registrations by rental car fleets was weaker than the percentage growth seen by the other markets, but it still saw a 9.7% y/y increase to 32,971 units. With registrations having broken through the 500,000-unit mark during the first half of the year, there is greater confidence that combined with the extension to the scheme that registrations in the region will reach over the 1 million mark, with IHS Automotive forecasting that registrations will hit 1.02 million units by the end of 2015, an increase of almost 20% y/y. As well as the various schemes, this will also be underpinned by improvements in the economy, which in 2015 is being helped by a weaker euro aiding the export sector, while pressure on domestic spending is abating in line with less acute financial and fiscal tensions, lifting confidence alongside lower inflation easing the squeeze on household real incomes. Lower energy costs should also lift consumers' purchasing power and also significantly help companies' margins, which will be supportive to investment and employment. However, while we currently expect real incomes to recover steadily from 2015, helped by marginal inflation developments, income tax cuts from 1 January 2015, and an increasingly brisk employment growth, this is at risk from the latest price and wage data suggesting Spain is undergoing "an internal devaluation", being led by nominal wage growth compression triggered by recent labour market reforms and poor labour market conditions.

This is now the sixth month in succession of double-digit gains in the Italian passenger car market, and a considerable rise from May. One of the positive elements during the first half of the year has been the contribution of registrations to private demand, which rose at a similar rate to the market, taking 60.6% of the market. The rental car market has risen in both the short- and long-term markets of 19.6% y/y to take a 24.1% share. The short-term market has particularly benefited from preparations for the Milan Expo (Italy) that started in May. However, company car growth reached just 6.2%. However, while the gains in the private market are a positive sign as customers return to the market to replace ageing vehicles, the president of UNRAE, Massimo Nordio, has said that there is more than could be done to support the market and accelerate the disposal of older vehicles. IHS Automotive currently expects that the Italian passenger car market will grow by 8.5% y/y in 2015 to 1.49 million registrations, with further gains anticipated until the end of the decade as the need to replace becomes even more important. Even so, the number of registrations made will be considerably below the previous decade, with little sign that it will be close to returning to these highs in our current forecast visibility.