According to the Italian association of the automotive industry, ANFIA, registrations of new cars increased by 13.1% in December 2016 compared to December 2015. This was the tenth month of 2016 in which Italy enjoyed double-digit growth year on year, with July and November being the only exceptions to this phenomenon. Registrations for the full year exceeded 1.82 million units, an increase of 15.8%. Coincidentally, the Italian market experienced almost identical growth in percentage terms in 2015 and this is now the third consecutive year of growth. Demand in 2016 was still 27% lower than in 2007 and the so the market still has a long way to go to recover to pre-crisis levels. However, continuing uncertainty around the banking crisis is having an impact on consumer confidence and individuals’ willingness to spend. While consumers have been willing to replace their car, resulting in a renewal in the car parc, the confidence index suggests that end users are beginning to reconsider making large-scale purchases.
Despite the end of the Programa de Incentivos al Vehículo Eficiente (PIVE), which incentivised low-emission vehicles and ran to 31 July 2016, Spain’s new car market continues to recover as the economy improves. Although lower than the double-digit growth recorded in new car registrations throughout most of 2016 and with demand from private consumers essentially flat, new car registrations still grew by 9.3% year on year in December due to resilient car purchasing by the fleet and rental sectors. For the whole of 2016, almost 1.15 million new cars were registered in Spain, 10.9% more than in 2015, although this remains firmly below the pre-financial crisis peak of around 1.6 million car registrations in 2006-2007. Given strong economic fundamentals, the outlook for both new and used car demand is positive. New car sales growth is expected to slow from recent levels, but used car demand should remain buoyant. However, used car valuations in Spain are expected to stabilise over the coming 36 months. Indeed, growth in residual values had already begun to flatten out in the second half of 2016.
New car demand increased by 5.8% year on year in France in December, broadly in line with the full-year gain of 5.1% compared to 2015. Following four consecutive years of contraction, the French new car market only mustered negligible growth in 2014 and so the 2016 result solidifies the recovery that only really commenced in 2015. Nevertheless, at only 10% below the pre-recession peak, falls in France were not as dramatic as seen elsewhere in Europe, notably Spain. Economic recovery in France is still fragile but employment rates are increasing slightly and low inflation has led to salary increases in real-terms, supporting consumers’ willingness to spend. However, the consumer confidence index shows no signs of improving markedly and the flat unemployment rate, slow GDP growth and a current account balance hovering around 0% of GDP suggest an economy that is largely stagnant – representing a gloomy picture for new and used car sales.
Overall, new car demand exceeded expectations in France, Italy and Spain in 2016. However, France and Spain only registered just over 10,000 new cars more than forecast in the Autovista Intelligence Residual Value Outlook 2017 report and a mere 3,000 more cars were registered in Italy than predicted. The underlying assumptions about the outlook for new and used car demand and, ultimately, the performance of residual values are unchanged.
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