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Economy in Brief

European Car Registrations Rebound But Remain in a Longer-term Downtrend
by Robert Brusca  July 16, 2021

European car registrations (from here-on I will use 'sales' to describe 'registrations') rebounded strongly on a 15.3% gain in June after falling 1.5% in May and 4.7% in April. From April to November of 2020, the absolute monthly percentage change in car sales averaged 10.6%. This has been a very volatile period for car sales encompassing the Covid period, a few months before Covid and the more recent Covid recovery period.

Over the last three months, sales in Europe gained at a 37.5% annual rate as the June gain dominates the declines of the two earlier months. But over six months, sales fall by 20.8% annualized. Year-on-year comparing sales to the Post-Covid level of sales in June 2020 yields a 9.2% gain. Sales smoothed more broadly looking at the 12-month average of sales compared to the nonoverlapping 12-month period before that shows a rise in sales of 3.8%. Still, sales in June 2021 are lower by 6.3% than they were in January 2020 before the virus struck.

Three-month smoothed (average) data show steady but small monthly gains in each of the last three months.

The EMU countries in the table all are struggling with sales. The U.K. numbers are much stronger. But in truth, there is just a small timing difference in the recovery pattern among these countries. Scaling all sales by December, sales levels shows a very similar evolution of sales for all the countries in the table. The U.K., in fact, is not a special case.

One of the things we are seeing in these data is how the growth rates for sales appears high. This is because it is high! The year-ago period was still depressed by Covid-related issues. So that sales strength may not mean that the damage of the Covid setback has been neutralized. At the bottom of this small table, we see sales growth ranked on data since 1995 and since 2008. Note that since 1995 the total European sales rank is in its 82nd percentile. On smoothed data, it jumps to its 99th percentile. Sales year-on-year appear very strong. But at the top of the table (as well as below with country detail), we show unit selling rates data and we rank them over the same periods. These are the annualized unit sales by month compared to annualized unit sales for all other months since 1995 and since 2008. On this basis, the ranking since 1995 falls to the 20th percentile, the lower one-fifth of its queue of monthly data not the top 20 percent. The smoothed sales since 1995 rank also drops to the 8.2 percentile - to the lowest eight percentile of the queue of data. Clearly unit sales are weak despite the fact that growth in sales has been so strong.

These comparisons underscore that Europe is having a relatively robust rebound in sales of vehicles but that the return to the pace of sales of the past is far from complete. Sales in Europe still have a long way to go to put the sector back in normalcy. Compared to their own historic standards, the countries in the table are below their respective medians on both timelines. Since 2008 Germany and the U.K. are closest to being back to normal (median is a ranking of 50%) as both have rankings in their 40th percentiles; Italy has a ranking in its 35th percentile; Spain's ranking is in its 22nd percentile. France lags well behind with sales hovering above the fifth percentile, an extremely weak result.

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