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28/08/2015
GROWTH IN UNCERTAIN TIMES

Automotive Market


Six months with double digit growth figures, and yet the health of the Italian automotive market, partly due to uncertainties about the economic situation, appears rather unsteady.

 

Renzo Dotti

After the first six months of 2015, an overview of the Italian car market, a traditionally strategic sector of our economy, is due, seeing that it employs hundreds of thousands of workers and has suffered a downfall of unprecedented proportions in recent years, with sales regressing, in absolute terms, to late seventies figures. But now the trend is finally positive again and looks set to stabilize in the coming months. In fact, this year’s figures seem to confirm the domestic market’s growing trend of the last 13 months, and the 14.3% increase recorded in June 2015, compared to the same month in 2014, represents the 6th consecutive double digit growth. In short, as a first impression, these numbers can only inspire optimism to those who, like myself, are naturally inclined to see the downside of things.

 

Aspects to be reckoned with

The first aspect that deserves to be mentioned, in order to better understand the dynamics of the automotive market, is the fact that the 146,682 new registrations recorded in June 2015 benefited from an extra working day, without which the growth decline recorded in May would have been confirmed. Nevertheless, in the first six months of the year, 872,951 new registrations were recorded, which means a +15,2% increase over the same period in 2014. No doubt about it, this is a huge confidence boost compared to the funereal atmosphere that reigned only a year ago. There are yet other issues that should not be neglected though, which may provide a better idea of "where we are going." Putting aside any in-depth consideration/debate on the Greece – Europe issue, exploded as this article was being prepared and which is likely to weigh significantly on all sectors of the EU’s economy and not only, what should be noted, however, is that this month’s sales volumes are actually comparable to those of 1996, nearly twenty years ago, and that to reach the physiological size of the domestic market, about 1.8 million new registrations per year, according to experts, the path is still “long, cramped and narrow”. The latest projections for 2015 estimate in fact sales between 1.46 and 1.48 million new cars. Another interesting clue, based on an exchange of information between Anfia and Unrae, relates to new contracts, confirming a slowdown: approximately 127,000 contracts, representing a 9% increase compared to June 2014 and a 16,5% increase in the first half of the year, with approximately 880,000 units overall.

 

Fever drops, but still sick

Therefore, in view of the many issues involved, a healthy dose of realism about the health of our domestic car market is required. In this respect, Massimo Nordio, president of Unrae, while admitting his satisfaction with the results achieved in the first six months of 2015, revealed at the same time how the national car market may be compared to a patient whose fever has gone from 40° to 38 °. In essence, what is still missing, according to Massimo Nordio, president of UNRAE (Association of foreign car makers operating in Italy), are effective measures aimed at strengthening the most important sales channel in our market, namely families and private owners. Despite difficulties, this segment of the market reached remarkable results in the month of June (+27,3%), responding positively to the considerable, yet limited in time, investments by car manufacturers and their sales networks. Rentals, on the other hand, are bucking the trend (-1.1%), not to mention new company vehicles (-6.5%), and without a proper tax revision, it is likely that the much needed renewal of rental fleets will be smothered right away.



Analyzing six months of new registrations         

Let us now look at some figures that, from different angles, will help us to draw up a report about the first six months of 2015 and the Italian automotive industry. Sales figures highlight a sudden rise among private owners +15,2%, in line with company car sales figures, reaching a total market share of 60,6%, slightly more than last year. Also rentals score an encouraging +19.6% during the first six months of 2015, bringing their market share to 24.1%, while company car sales grew by 6.2 %, representing 15.2% of the share and losing more than one percentage point over last year’s first six months. Double-digit growth figures are recorded also for all types of engines, except CNG powered engines, up only by 2.9%. Petrol fueled engines remain substantially stable, just as LPG, hybrid and electric powered cars, while diesel engines gain one percentage point, reaching 30,6% of the total share; CNG, on the other hand, loses half a point settling at 4% of the market share. As far as vehicle type, crossovers had the lion’s share (+44,3%), with a market share of 16,1%. Positive growth figures were recorded also by other vehicle types, while compact minivans drop slightly and convertibles, coupès and the larger minivans decrease considerably. Finally, breaking down the figures by geographical areas, more interesting facts emerge: once again the  North Eastern regions top the country with 34,7% new registrations. This means that over one out of three vehicles sold is registered in this area of the country. The North West loses some of its market share, while Centre, South and Isles remain stable. A final consideration, however banal it might seem, prompts me to think that, despite the current climate of optimism (increased over the last few months), the market will struggle to return to pre-crisis figures without important and lasting signals, mainly from the employment market.

 

 

No insurance for one car out of ten

It is becoming statistically more likely to have to deal with drivers without insurance coverage. In fact, despite a reduction in the average cost of TPL insurance, "ghost cars", ie cars without third party insurance, are still too common in Italy. Last year vehicles without insurance passed from 3.5 to 3.9 million, or 8.7% of all circulating vehicles. The economic recession and rising unemployment have certainly influenced the decision of motorists, but the trend is growing dangerously and threatens to become a social phenomenon totally out of control, especially in Southern Italy, where the share of motorists circulating without Third Party insurance is as high as 13.5%, more than double compared to the Northern part of the Country 6.2%, while the Central regions settle at 8.5%.

 

 

 

The resurgence

In a market that is rising again from the "doldrums" of recent years, the national brands take center stage, reaching 41.847 new registrations in June 2015 (+ 20.1%) bringing their market share from last year’s 27,2%  to 28.5%. Excluding Ferrari and Maserati (up respectively 38.9% and 22.3%) 41,634 registrations related to vehicles of the FCA group (+ 20%), with a positive trend for Fiat (+12, 6%), Alfa Romeo (+ 17%), Lancia / Chrysler (+ 22%) and especially Jeep (+ 309.2%). Italian cars totaled 249,399 new registrations during the first six months of 2015 (+ 17%), increasing their market share from 28.1% in 2014 to 28,6%. True, gone are the days when a car out of two was Italian, but signals provide a glimpse of a positive repositioning of our automotive brands in the near future, at least on the domestic market.


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