Euro Car sales

Sammy Chan, Senior Analyst

25 October 2019

Winning on the road

Winning on the road

Overall European Car sales declined by 4% in the first eight months of 2019. However, this figure is skewed by the high base effect caused by the pull-forward in sales around August 2018, prior to the September 2018 WLTP deadline, when a lack of model availability acted as a drag on market activity. That being said, we expect the remaining months of this year to show improvement. Unpicking the overall market fall of 4% reveals that the Premium segment dipped by just 2% in the same year-to-date period, which effectively means that Premium market share in Europe grew by 0.6 percentage points. Looking ahead, we do expect the Premium segment to recover further, thanks to a second wind, following two consecutive years of stagnation.

If our prediction holds true, then which of the Premium OEMs would benefit most? The Big Three – Audi, BMW and Mercedes-Benz – have consistently dominated close to 70% of Premium sales in their home continent. But for some of the other manufacturers, competing for the remaining slice of the Premium-market pie has proven tough. After two years of sharp decline, Infiniti, for instance, has been forced pull out of Europe (excluding the CIS markets), having failed to gain a foothold since its European launch in 2008.

“European Premium brands have, typically, been able to fall back on home-market support and Alfa Romeo is no exception, with over 50% of its 2018 European sales being generated in Italy.”

Meanwhile, Alfa Romeo’s volume for the first eight months of 2019 fell below 40,000 units – clearly a disappointing result, in view of the aggressive targets FCA had set for the brand only a few years ago. European Premium brands have, typically, been able to fall back on home-market support and Alfa Romeo is no exception, with over 50% of its 2018 European sales being generated in Italy. Similarly, DS saw 50% of its sales come from France, while over 40% of Jaguar’s sales were from the UK. While this home support may provide something of a safety net, over-reliance on a struggling market can be a double-edged sword. To wit, the Italian economy fluctuating in and out of recession in recent quarters has only served to create a further headwind for Alfa Romeo’s model line-up.

Elsewhere, Volvo only saw 21% of its 2018 sales originate in Sweden. This relatively low domestic market share goes to show the greater level of acceptance that Volvo has gained in other European markets. Indeed, this wider regional spread proved valuable last year as the launch of the XC40 propelled the brand to a European sales record, despite a volume contraction in Sweden.

The diversity of markets across Europe will continue to throw up numerous challenges for automakers, whether it be the economic environment, haste of EV adoption or a shift in bodystyle preference. While having a wide-spread geographical footprint provides a somewhat surer market footing, achieving this is easier said than done.