A mild winter, combined with 20% price discounts, has kept EU auto sales in growth mode. Latest data from ACEA shows January sales at 999k were the best for the month since 2011′s 1.042m. The chart above shows the 12-month trend line since 2005, to avoid seasonal fluctuations with the monthly data (blue line):
- Sales were stable through to 2008 at around 12m, and recovered temporarily after 2009 due to government stimulus
- But they then began a steady decline to below 10m until the end of 2013
- Over the past year, however, manufacturers have made increasing use of discounts, which now average 20%, to support sales
- Governments such as Spain’s have also introduced €2k subsidies ($2.3k), helping to push Spanish sales up 28% in January
At the same time, the industry is continuing its move into the New Normal, with 2 key issues now impacting the market:
The first is the continuing shift by private individuals towards low-cost cars, such as Renault’s Dacia. Its basic model sells for around €7k, and saw its sales rise 23% in 2014 after a similar increase in 2013.
This parallels the second trend, which is the continuing decline in the number of private individuals buying cars. As Peter Fuss at EY has noted: “Not since the year 2000 have so few cars been bought by private individuals.”
The second chart highlights two critical drivers for this move into the New Normal:
- Europe’s ageing populations are driving less. Once people move into their 50s and 60s, they stop being a taxi service for their children and they also stop driving to work once they retire
- Young adults are driving less. As BMW’s ‘Institute for Future Mobility’ described at our November conference, young people in the West no longer see taking a driving test as a ‘rite of passage’. They also often prefer to use social media or public transport for both cost and environmental reasons
As a result, broader trends are starting to develop that will further reduce the attractions of owning a car. One is the growth of car-sharing applications such as Uber. Another is the discussion underway in Paris, France, about banning older vehicles from the city centre.
This follows a call from the Mayor of Paris for all diesel cars to be banned by 2020. And polls suggest a majority of Parisians support a diesel ban.
One simple reason is that car-owners are now becoming the minority in many major European cities. As the Mayor notes, “Today 60% of Parisians already do not have cars, compared with 40% in 2001. Things are changing quickly“.