ExpertEye European Automotive Report Q3 2016 | Page 9

European car parc may hit pre-crisis levels just as another starts Italy is presenting a 2017 budget which doesn’t just delay but actually excludes the 2% VAT rise Total EU Passenger Car Sales 2018 agreed as part of its austerity programme. Therefore the rush to buy big ticket items like cars before a VAT rise should now ease, resulting in any growth being less dramatic than previously expected leaving France as Europe’s third largest car market. Whilst the removal of the 2% rise will reduce the urgency for car buyers, we still expect Italy to break back above the 2 million car sales per annum mark in 2017 leaving Italy and France neck and neck. ROE 26.3% Portugal 1.5% Spain 8.1% German y 23.2% UK 15.0% Italy 12.9% France 13.0% euro. Should this happen we could see repercussions during 2018 such as another major country leaving the EU or even the euro which would result in a 2019-2020 dip of a scale similar to 2008 and 2011. From a residual value perspective this could be disastrous. The car parc of left-hand drive 0-5 year old cars will be back to pre crisis levels by 2019 and the risk of another new car market crash just as the used car market is full would see RVs tumble by potentially up to 20% as we saw during the last crisis. 70.00 1-5 year old car parc 14.00 60.00 12.00 50.00 10.00 40.00 8.00 30.00 6.00 20.00 4.00 10.00 2.00 0.00 0.00 LHD 4-5 years old LHD 1-2 years old RHD 3-4 years old RHD <1 year old LHD 3-4 years old LHD <1 year old RHD 2-3 years old UK & Eire RHD Markets (lines) car market to collapse, they are certainly capable of destabilising the Mainland Europe LHD markets (shaded areas) referendum or the French or German elections is unlikely to cause the Thousands nationalism. Whilst a Brexit/Trump shock result in any of the Italian Thousands However there remains significant uncertainty heading towards 2017 due to the rise in LHD 2-3 years old RHD 4-5 years old RHD 1-2 years old Source: ACEA.BE – Historic data Bowkett Auto Consulting Ltd - Forecasts European Automotive Report - 2016 Quarter 3 8