1. Automotive market strengthens further sales remain on uptrend
2. Q1’14 output almost 11% up;
3. Mildly positive outlook for remainder 2014 and 2015.
The EU car market strengthened further in the course of the 2nd quarter. Car sales increased for the ninth month in a row in May. The year to date rise in sales amounts to 6.9%. All key markets registered better demand. A similar trend could be observed in de commercial vehicle market in the EU. Sales rose 9.1% YoY in May, which resulted in a year to date growth of 10.8%. Demand for medium and heavy commercial vehicles appears to be stuttering with just below 3% growth so far this year, whereas demand for light commercial vehicles remained on a strong uptrend.
Demand from abroad for EU premium brand cars is still robust and remained supportive to automotive production in Germany and the UK. Actual automotive production in Q1 2014 turned out to be better than previously estimated. Q1 output rose 10.9% YoY. Activity expanded significantly in basically all reporting countries, only in Belgium and especially the UK growth was weak. The British automotive sector is operating at almost full capacity, which explains output stabilising at the level of last year.
First estimates for Q2 activity signal further growth of around 5% YoY. While demand fundamentals are expected to remain positive over the coming quarters, the pace of expansion in automotive sales may ease somewhat. Compared with already improved activity levels in H2 2013, output growth in the second half of this year is seen slowing to around 3%. On balance, total automotive output is projected to increase almost 5.5% in 2014.
The outlook for 2015 remains moderately positive. The EU passenger car market is expected to expand further as the economic recovery in the EU is taking hold and consumer sentiment strengthens. However, with sales primarily being driven by replacement demand, growth will be rather modest.
Also the commercial vehicles market is forecast to expand moderately further. Higher economic activity should translate into better levels of transport requirements and encourage investment in transport equipment.
Car and component exports will remain supportive to automotive production. Total automotive output is expected to rise by around 3% in 2015. Activity in Spain, Italy, Sweden and in general in the Central European countries is seen rising rather rapidly. In France growth will remain sluggish, whereas UK output is seen falling 1%.
Source – Strategic Research institute