European Car Registrations Weaken Sharply

Passenger car registrations fell sharply across Europe in January. France logged the smallest fall on the monthly drop of just 1.5% while Spain at -54.7% took the largest month-to-month hit. The pace of sales in January in Europe is the slowest ever for January on data back to 1995. Only three months over that span, March, April and May of 2020 had weaker sales. These were months with the Covid-19 infection at its peak and once again the Covid-19 virus has spread through Europe and caused lockdowns impairing economic activity across Europe.

All 12-month six-month and three-month percentage changes show drops for all countries and the headline with only two exceptions. France logs a year-on-year gain in registrations of 2.8%. And the smoothed three-month average for all of Europe logs a rise at a 24% annual rate over six months. The latter rise is smoothed from a three-month average so on the monthly data only the French year-on-year gain - a small one at that - is an exception.

January shows declines in registrations across the board but after a relatively strong December. The graphic shows that there has not been a full recovery in auto registrations since the Great Recession. Since that event, sales have not regained their former selling pace and the series seems to redefine itself with occasion downdrafts and succumbs to periods with trend deterioration. Europe is experiencing such deterioration now.

The table to the left chronicles the ranking of sales based on the unit pace recorded. Europe’s ranking in January is in the lowest 1% of all sales back to 1995 and in the lowest 1.9% of all sales since 2008.

Country rankings on the long scale back to 1995 show Germany and the U.K. with the weakest registrations (sales) rates followed closely by Spain (2.6%) and somewhat more distantly by Italy (12.5%). French sales register a lower 31.6 percentile standing, still very weak but not in the same league of weakness as other countries in this table.

Ranking registrations (sales) on the same timeline but this time done based on their year-on-year pace rather than on the selling rate does not change the story very much. Sales are still ranking in the lower 1% of all growth rates back to 1995. (see the bottom of the table)

The bottom line is that the Covid-19 factor continues to impact economic performance and not just as an aside. The impact continues to be large in some places. Germany and the U.K. had the most severe lockdowns during this period and suffered the worst registration (sales) performance.

Covid-19 continues to call the turn more than economics. What that means is that trends do not seem to matter because a good trend can be cut short by a Covid-19 lockdown. And a weak trend can come to life if a Covid-19 lockdown is ended. Even economic fundamentals matter only as a background issue as we try to evaluate how the economy will be able to recover once a Covid-19 incident passes. Europe remains in the grip of Covid-19 much more than it is in the grip of some economic process. Everyone looks to the spread of vaccinations to break this link.