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29 Jul 22

Europe’s new car sales unlikely to recover until 2030s

Manufacturers are prioritising sales to private drivers ahead of fleets as supply chain issues constrain new car availability, while rising Ev sales fail to compensate for falling petrol and diesel registrations

New car sales figures for the first half of 2022 reveal the full impact of component shortages in the vehicle manufacturing supply chain across Europe.

During the first six months of the year, new car registrations in the EU contracted by 14% compared to the same period in 2021, which was already a low base, shrinking to a total of about 4.6 million units. Sales in the continent’s largest new car market, Germany, were 11% down on the first half of 2021, but 33% down on pre-Covid 2019. All four of the European Union’s major markets posted double-digit drops for the first six months of the year: Italy (-22.7%), France (-16.3%), Germany (-11.0%) and Spain (-10.7%).

In the UK, Europe’s other major market but no longer in the EU, year to date sales were down 12% for the first six months of 2022, dragged lower by a 27.6% decline in fleet sales. The figures provide further evidence that manufacturers are prioritising higher margin sales to private motorists over fleet and business registrations.

Mike Hawes, SMMT Chief Executive, said: “The semiconductor shortage is stifling the new car market even more than last year’s lockdown.”

The one bright spot in this gloomy outlook is the rising demand for electric cars, although the increase in their sales is insufficient to offset the sharp falls in petrol and diesel registrations.

Sales of battery electric cars were 89% higher in Belgium, 29% higher in France, 83% up in the Netherlands, and 56% up in the UK during the first six months of 2022 compared to the same period of last year. Across the EU, BEV sales rose by 28.4% to 457,608 registrations, although plug-in hybrid sales suffered a 9.6% decline over the same period as drivers made the transition to zero emission motoring with more confidence.

BEV gains were largely at the expense of internal combustion engines, however, with both petrol and diesel cars suffering sales declines. Across the EU, sales of petrol-powered cars were down by 22% in the first half of the year, to 1,748,561 units (2021: 2,248,716) while diesel slipped by 30.6% to 803,013 registrations (2021: 1,157,885). Some individual countries recorded even more severe falls – diesel sales were 41% down in Belgium, 39% lower in France and 51% lower in the UK during the first six months of 2022 compared to the same period of last year.

Autovista24 forecasts that the continuing semiconductor shortage, as well as component disruption from the war in Ukraine and COVID-19-related lockdowns in China, will push a large number of registrations originally scheduled for this year into 2023, and that the market will not return to any kind of normal until 2024, although it does not expect the European new-car market to return to pre-pandemic levels until the next decade.

By that date many manufacturers have committed to produce only electric vehicles - Fiat from 2027, Mercedes from 2030 and Volkswagen from 2033. By 2035, almost all OEMs will by 100% BEV in their car production.

Forecasts by Dataforce point to a BEV market share of new car sales of 21% by 2027, 56% by 2030 and 80% by 2035, the date at which many EU countries are looking to end the sale of cars with internal combustion engines.

Illustrations: Shutterstock, ACEA, Autovista

Authored by: Jonathan Manning