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Economy in Brief

European Car Registrations Remain Weak
by Robert Brusca  September 16, 2021

Car registrations fell for the second month in a row. Registrations fell for two months running in every country in the table except for France where sales rose by 5.1% in August after a 5.3% drop in July.

All sequential trends have been interrupted by gains of smaller rates of decline over six months. Most countries have year-on-year declines of around 20% to 30% over 12 months However, annualized declines run from 40% to nearly 70% over three months except for France that logs an increase. Over three months, French registrations rise at a 5.4% rate.

Still, the overwhelming trend is to more weakness. The headline losses are more muted (still over 20% year-over-year) but down at a 5% pace over six months and at a 13% pace over three months.

Yet, growth rates calculated on the total from three-month averages show that there is an improving trend in smoothed data from -14.2% over 12 months to -6.3% over six months to 4.7% over three months. And the broader 12-month average over the previous 12-month average shows an overall gain of 1.9% and gains in registrations in three of the five listed countries (Germany, Italy, and the U.K.). Looking at the chart, that seems to be more an artifact of extreme weakness 13-24 months ago that because of any real improvement in train now.

Registrations remain sharply lower from the January 2020 level and are lower by 21% to 30% over the period except for France again where sales are lower by just 8.7%. Auto sales have been very slow to recover and now chip shortages have turned a demand problem into a supply problem. By the time the supply problem is remedied, the demand problems could also be much closer to having been fixed.

Overall registration fell by 3.1% in August and are lower by 22% year-over-year.

This table presents two perspectives on ranking the current registrations. In the top panel registrations are ranked based on the level of registrations compared to two different time periods. In all cases the registrations rank as extremely weak, in the bottom 10 percentile of their respective historic queue of data, for most of the countries in either of the two horizons. In the lower panel of the table, total growth rates are present for raw and for smoothed data. Both methods on both timelines produce very weak results. The growth data rank the pace of growth over the year irrespective of the overall level of registrations. Either way these data are presented produces weakness – extreme weakness.

The auto sector is a hard one to read these days. It is an important barometer of the demand for durable goods. But with the ongoing chip and other supply chain shortages, we cannot disentangle the weakness in demand from supply. For now, together, they produce a deep weakness in auto sales and registrations without any sign of respite.

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