Western Europe Sales Gaining Again In 2017, But Pace Slowing.
Brexit Cited As Big Hurdle For U.K., And Market As A Whole.
“But the outlook in 2018 appears increasingly uncertain as a result of Brexit and other potential causes of macroeconomic instability”
Western Europe’s car sales in 2017 look set to hit their highest since the global recession began, but the prospects for 2018 look increasingly cloudy.
LMC Automotive said after October’s 4.6 per cent increase sales for the year look set to hit just under 14.3 million for a 2.5 per cent gain. Sales growth peaked in 2015 at 8.9 per cent and has been slowing since then with a 5.8 per cent gain in 2016. Next year’s sales should show almost no gain, with an increase of only 0.8 per cent, according to LMC Automotive.
IHS Markit expects sales to rise a bit more in 2017 to 14.4 million, which would be a gain of 3.0 per cent on 2016.
“But the outlook in 2018 appears increasingly uncertain as a result of Brexit and other potential causes of macroeconomic instability,” IHS analyst Tim Urquhart said.
Citi Research said the market was looking strong in October “until the U.K. numbers arrived”.
“Registrations in the top five markets were up 3.9 per cent, year on year in October, but without the U.K. the rise was more than twice that figure,” Citi Research said in a report.
Diesel under pressure
“Diesel remains under pressure, penetration fell 740bps (basis points) led by U.K. diesel volumes down 30 per cent year on year. Higher interest rates, Brexit fears and peak volumes make for a tough U.K. backdrop, whereas Germany looks to be getting stronger and scrapping incentives are likely to boost year end volumes,” Citi Research said.
LMC Automotive reckons stagnation is likely next year.
“”Looking to 2018, the market will be constrained by struggling U.K. sales and high base effects, leading to lower year on year growth in the region, at around 0.8 per cent,” LMC Automotive said.
Turning to auto production, BMI Research said Germany will experience growth of 2.0 per cent in 2018, supported by a favourable outlook for the domestic and European markets.
“That being said, we expect declining vehicle demand in the U.K. and U.S. will act as a drag on German exports. We forecast new vehicle sales in the country to experience growth of 4.1 per cent in 2018, totalling 4.0 million units by year end. But a decline in vehicle demand in the U.K., which accounted for 14.2 per cent of Germany’s total vehicle exports in 2016, will act as a drag on our outlook for domestic autos production. We forecast vehicle sales in the U.K. to fall 2.1 per cent in 2018 as consumer concerns over Brexit continue to intensify,” BMI Research said.
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