Europe’s car market is set to expand this year for the third straight year driven by a continued recovery of key southern European economies, following a strong 2015 that topped even the most bullish expectations of analysts and forecasters.
Powered by forecast gains in France, Spain and Italy, new-car registrations are expected to grow more than 3% to 14.46 million vehicles in western and eastern Europe this year, according to IHS Automotive, regaining roughly half of the market’s losses since volume peaked in 2007 at nearly 16 million. PwC and LMC Automotive see sales in Europe rising to 14.6 million in 2016.
“Overall, we are expecting to see the eurozone as an economy pick up. Unemployment levels are coming down particularly in key markets that suffered like Spain. So there are reasons to be positive about the outlook for Europe’s car market for 2016,” said LMC Automotive forecaster, Jonathon Poskitt.
Last year’s sales of roughly 14 million were nearly 2 million units higher than just two years prior and the best result since the 14.5 million volume achieved in 2009, when some markets such as Germany–Europe’s largest–were artificially inflated by car scrappage schemes.
“No one counted on that [strong sales result for 2015] 12 months ago,” Matthias Wissmann, head of the German auto industry association VDA, said.
While sales in southern European markets such as Italy are still below past levels, other key markets are not. Germany produced 3.2 million cars last year—a level not seen since 2006, excluding the scrappage-induced rise to 3.8 million in 2009.
The UK market reached a record high, thanks to the combination of widely available cheap credit and channel-stuffing by carmakers.
Signs of a slowdown have started to appear, as the UK’s October registrations dipped for the first time in 44 months.
Experts say the overall economic picture for Europe remains largely positive despite cooling demand in China, which reduced exports and discouraged business investments. What has helped offset the effect of China has been European consumer spending, the major driver of the recovery over the past eight quarters.
