European car market set for U-shaped COVID-19 recovery, says JATO

The European new car market could expect a U-shaped recovery after being hit hard by the COVID-19 coronavirus outbreak in March, according to the latest global sales data compiled by JATO Dynamics.

This represents the largest year-on-year monthly decrease since 1980, when JATO, a leading provider of global automotive data and insight, started to collect data – even surpassing the global financial crisis in November 2008, which saw a 25% decline in sales.

The decline represents the worst hit to Europe’s March new car sales since 1980, with a total of 848,800 new cars sold across Europe last month.

JATO said that Europe’s recovery from the pandemic could be more protracted than that being seen in China, adding that “unlike China, the recovery for Europe is likely to be U-shaped rather than V-shaped”.

Varied impact

Registrations across Europe’s 27 markets fell with varying severity during March, with volumes fluctuating only marginally in Finland and Lithuania, according to Jato’s data.

In Finland’s case, isolation was advised by the government but was not mandatory, with consumers in Lithuania still able to purchase new cars remotely, with delivery taking between three and seven working days.

Swedish car registrations fell by 9%, meanwhile, the third smallest decline, due to the population not being forced to stay in their homes. In contrast, markets were significantly hit in Italy, France, Spain, Austria, Ireland, Slovenia, Greece and Portugal, where the combined volume fell from 634,600 units in March 2019 to 161,800 units last month.

“This downward trend is not simply due to the restrictions of free movement. The industry is being impacted largely by the uncertainty for the future, and this issue started to arise even before the pandemic took hold,” said Felipe Munoz, JATO’s global analyst.

“And unlike previous recessions, we’re not just dealing with people’s fears or purchase delays. This time we have to consider that consumers are simply unable to leave their homes.”

The figures were confirmed by European manufacturer’s trade association, ACEA, which reported that new car sales tumbled by 52% in Europe's major markets in March as lockdowns imposed due to the coronavirus took their toll.

Registrations dropped to 853,077 vehicles in the European Union, Britain and the European Free Trade Association (EFTA) countries, ACEA said.

The total marks the lowest since at least 1990, when ACEA first started to compile data, and follows similar slumps in China and the US.

April will likely prove no better as car plants remain idle and government-imposed lockdowns exacerbate an economic crash that looks set to outstrip the 2008/09 financial crisis.

"With containment or lockdown measures taking hold in most markets from around the middle of the month, the vast majority of European dealerships were closed during the second half of March," ACEA said.

Sales fell in all EU markets, with Italy - hit particularly hard by the pandemic -- reporting the biggest drop of 85%, while registrations tumbled by 38% in Germany, 44% in the UK, 72% in France and 69% in Spain.

Volkswagen Group's Europe sales dropped by 44% while Renault Group and PSA Group posted falls of 64% and 67% respectively. Fiat Group registrations fell 74%.

Sales of BMW Group vehicles, which was among the few automakers reporting an increase in European sales in previous months, dropped by 40%, while demand for rival Daimler decreased by 41%.

The decline in registrations comes as the majority of car dealerships in Europe were closed during the second half of March as part of the measures to contain the pandemic.

Meanwhile, the German government has announced that dealerships in the country will be allowed to resume selling cars as Chancellor Angela Merkel's government relaxed its lockdown in Europe's biggest market.

EV growth

Despite the general sales slump, JATO's figures showed that electrified vehicles still increased their registrations across Europe by 15% to 147,500 units in March, posting a new record market share of 17.4% – 10.1% higher than seen in March 2019.

The positive results came as a result of more electrified vehicle sales from Mercedes (up 44%), Volkswagen (up 240%), BMW (up 15%), Hyundai (up 25%), Volvo (up 79%), and Suzuki.

Pure electric vehicles (EV) and plug-in hybrids (PHEV) drove the growth, as sales of hybrids declined by 11%.

Models like the Volkswagen e-Golf, Audi E-Tron, and the VW e-Up all posted impressive results in March, with new arrivals like the MINI electric, Peugeot e-208 and MG ZS helping account for 17% of all EV registrations.

JATO also reported that in China, the automotive landscape had improved since February, when sales shrank by 79% year-on-year – with “significant improvements” in both production and sales.

China’s March car sales decline narrowed to just 30% from a year earlier, with further performance improvement expected in April with the continuous decline of the epidemic as well as a series of central and local government policies shoring up the car market.

Full details of the JATO report available here

If you require any further information or advice on this topic, please contact info@fleetlogistics.com or visit www.fleetlogistics.com