European new car sales led the world in the first half of this year and accounted for almost a quarter of global sales, according to the latest economic and market report from European car-makers association, ACEA.
The report reveals that European registrations of passenger cars increased by 6.4% during the first six months of this year and represented 24.5% of the global market.
Substantial growth posted by EU member states contributed significantly to the positive global picture, thanks to economic improvement and better macro conditions. And with 7.8 million passenger cars sold in the EU, results were 9.4% higher than in the first half of 2015, a solid and consistent performance.
There is no serious reason to think this positive trend should fade in the very short term, says the report. However, some risks remain, particularly following the Brexit vote in the UK, and uncertainty will inevitably continue to affect the car market.
Globally, 37.4 million passenger cars were sold in the first six months of 2016, 3.2% more than one year ago. But the picture was less than rosy in some parts of the world.
For example, during the first half of 2016, the Russian market shrank by 14.9%, due to high inflation and the resulting decline in consumer confidence.
However, recent months have shown a relative stabilisation and Ukraine has started to show signs of a possible recovery, with car registrations up 69.3% during the first half of the year.
After a slow start to the year, Turkey gained momentum in recent months, resulting in an increase in car sales of 3.2% over the first six months of the year.
In Japan, sales were down 5.9% in the first half of the year compared to 2015, due to the weaker domestic economy and lower consumption.
For this reason, the Japanese government decided to postpone the consumption tax hike planned for April 2017 to October 2019. The downturn in Japanese sales was partially offset by the growth observed in South Korea where sales were up 9.6% during the same period.
The United States remained stable during the first half of the year, with more than 7 million passenger cars sold so far in 2016, accounting for 19.1% of the global market.
The South American passenger car market still suffered from high inflation, currency devaluations and low consumer confidence. Brazil in particular, which accounts for most of South American car sales, saw a decline of 24.8% over the first half of 2016, mainly due to credit constraints and political uncertainty.
In the world’s largest car market, China, passenger car sales increased by 9.9%, thanks to a remarkable performance in the SUV segment. The Chinese market reached 10.3 million units and accounted for more than a quarter of global passenger car sales.
Looking at other emerging markets, demand in the Indian passenger car market increased over the first half of 2016, after a slow start in the first quarter. Sales reached 1.4 million units, up 3.1% compared to in the same period in 2015.
The report also highlighted other automotive trends, including the falling market share that diesel cars are now experiencing.
In the first half of 2016, 49.7% of all new passenger cars registered in Western Europe ran on diesel, 2.3% less than in the same period last year.
In the EU‐15 countries, diesel’s market share fell from 52.5% to 50.2% of registrations during the first half of the year.
The decline was widespread across Europe except for Denmark and Switzerland. The sharpest declines in the share of diesel cars were in Norway, Greece, Belgium, Spain, Luxembourg and France.
The report also looked at the increasing market share for alternative fuel vehicles (AFV). In the second quarter of 2016, AFV registrations in the EU remained stable, totaling 147,784 units.
Results were diverse among different vehicle categories. On the one hand, demand for electrically‐chargeable vehicles (ECVs) showed moderate growth and were up 7.1% during the second quarter of the year. This growth was supported by both battery driven vehicles, up 5.1%, and plug-in electric vehicles which were up 9.6%.
Registrations of new hybrid electric vehicles (HEV) also continued their positive momentum, posting a double‐digit gain of 22.6% and reaching 63,707 units. On the other hand, new registrations of cars powered by propane, ethanol or natural gas (NGV) showed a double‐digit decline, falling 20.8% during Q2 of 2016, totaling 50,211 vehicles.
Among the EU’s major markets, Spain saw the largest increase in AFV registrations over the last quarter which were up 84.4%, followed by the UK, up18.4%.
Italy performed less well compared to Q2 2015 and was down 14.7%, mainly due to a decline in registrations of propane and gas‐fuelled cars. However, at the same time Italian registrations in the hybrid segment posted a significant increase and were up 46.1%.
France, meanwhile, showed a mild decline in total AFV registrations, down 9.4%, mainly due to a drop in the HEV and NGV segments. Germany, however, remained stable in the second quarter, balancing a decline in propane and gas-fuelled car sales with an increase in hybrid registrations.
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