European Car Registrations Plummet; Registrations Were Last Lower 25 Months Ago

Car registrations in Europe are plunging and they're plunging pretty much everywhere where the data are being reported. One of the reasons for this is the sudden lack of popularity in electric vehicles, whose purchase demand has declined precipitously.

Country level data show that declines in registrations in August range from a month-to-month decline of 11.8% in Germany, to declines of 2.6% each in France and the United Kingdom. Germany, France, Italy, and Spain show substantial month-to-month declines in August and in July. Only the U.K. is an exception to this two-month losing streak; the U.K. 2.6% decline in registrations in August comes after a 3.9% increase in registrations in July.

Year-over-year total European registrations are down by 20.6%; smoothing this to look at declines over a three-month average reduces the drop to 6.6%; however, whether we look at raw declines or smoothed declines, the declines are generally getting bigger over shorter periods. The smooth declines, for example, moved from a 6.6% decline over 12 months to a 9.9% annualized decline over six months to a 10.9% annual rate of decline over three months. The annualized rate of decline is growing. The raw number for the year-over-year decline is a drop of 20.6% over 12 months, over six months that decline pace accelerates to 28.1% annualized, although there is a slight pullback showing a decline of 24.4% over three months; it's still a greater pace of decline than over 12 months.

The country level data show us that year-over-year declines range from exceptionally weak numbers like -27.6% in Germany and -21.1% in France, to more modest declines like -2.1% in the U.K. and -5.9% in Spain. However, all five reporting countries show year-over-year declines and of course the aggregate numbers presented are dismal.

If we compare what's going on with registrations now to the level of registrations before COVID struck, we're looking at double-digit declines. Raw net decline calculations round to double-digit declines for all five countries. The biggest shortfall from January 2020 levels is the U.K. that is 25.5% lower; however, Germany is also 23% lower, Italian registrations are about 21% lower, registration in France are 14% lower, while in Spain registrations are 9.5% lower.

The data in Table Registrations in Perspective present data based on unit registrations rather than on percent sales over set periods. Instead of looking at the pace of sales. we rank the level of registrations on two different base periods, one since 1995 and the other since 2008. Ranking data show that current sales levels are extremely weak whether we compare them to a period back to 2008 or a longer period back to 1995. I will comment here on the results back to 2008. For Europe as a whole, registrations rank in the lower 9% of all registration numbers since 2008; a lot of that weakness is relatively recent because the three-month moving average has a still weak but significantly higher ranking at the 24.3% level.

Looking at country level data, ranking since 2009 on registrations in Germany and France have standings in the lower 10-percentile of their respective queues if data. Italy and Spain have registrations that rank in the lower 30th percentile of their respective queues of data. In the United Kingdom, registrations rank in the lower 40% of their queue of data.

If we rank overall European registrations on year-over-year unit growth, European registrations have an 8.1 percentile ranking; applying that ranking to a smoothed three-month moving average elevates it to a 28.1 percentile. Both of those are still quite weak.

Car and vehicle sales are often good barometers of the health of an economy and the consumer sector. They're an important consumer item. They are a ‘big ticket’ item. They usually require financing for most people; and although sales are lumpy and people do not buy cars every year, they buy them frequently enough that when the data are pooled together and used as an indicator, they usually are illustrative of consumer health and disposition.

These data for Europe right now are creating a picture of a weak economy and a consumer that is pulling back. But what you are seeing now is that, for the time being, people are exhibiting muted preferences for electric vehicles. There may still be an unwillingness to commit to gas powered vehicles which they may find more familiar, but they may be still somewhat resistant to for ecological reasons. If people are really developing an aversion to electric cars that could be a problem for the automakers who have switched substantially to electric vehicle production, although recently some have been backing off from that commitment. Some have turned to hybrid production. This appears to be an industry in flux and the flux is related to a number of complicated issues. Among those issues, not to be dismissed, is the fact that electric cars, while more desirable to most people for their impact on ecology, cause consumers to make greater compromises in terms of how these vehicles have to be maintained, the planning that it takes to make sure that they're refueled for operation, and the range that these automobiles offer their owners. Another factor that could become a sneaky factor for Europe that hasn't been talked about very much, is the fact that Europe is undergoing a great deal of flooding right now, and water does not mix well with an electric vehicle. The presence of flooding in Europe - widespread flooding - could make electrical vehicles even less desirable.