After the purchase incentives for plug-in hybrids ended in Germany at the end of 2022, dealers tried to register as many customer vehicles as possible before the turn of the year. The decline of 8.8 percent in vehicles with alternative drives compared to January 2022 is therefore not surprising. Of the almost 180,000 cars newly registered in January, 39.1 percent were driven by an alternative drive (electric, hybrid, fuel cell, gas or hydrogen). Just over 15 percent of all new vehicles were equipped with an electric drive – a significant drop of over 32 percent compared to the same month last year. A good one in ten new cars was a purely electric car – also a decline of more than 13 percent.
Despite persistently difficult economic circumstances, the analysts at Dataforce expect the passenger car market to grow in 2023 as a whole. As production continues to ramp up, the order backlog should gradually work itself off. With regard to further electrification, however, the automotive market experts expect little progress. The European passenger car market has been at a permanent low for three years. Almost 30 percent fewer new passenger cars were registered last year than the average for 2016 and 2019. At the same time, the economic conditions for the current year 2023 are anything but conducive. Higher energy prices and the cost of living have significantly dampened consumer spending. The companies, which have become increasingly important as a group of buyers – around every third new car in Europe is a company car – are putting their investments on the back burner in view of rising interest rates.
The start into the new year 2023 was particularly difficult in Norway, the model country for electronics. A few years ago, the Scandinavian state introduced various tax exemptions to boost sales of electric cars, which worked splendidly. Above all, the elimination of the 25 percent VAT had a very positive impact on the electrical registrations. But this regulation was eliminated on December 31, 2022, so that registrations in January 2023 fell by 77 percent. The market share of battery electric vehicles is currently 67 percent and thus significantly lower than a year ago (January 2022: 84 percent). However, the number is still twice as high as in all other European countries last year.
In the five big European countries, the number of registrations rose by eleven percent compared to 2022. Spain was the frontrunner in terms of new registrations with growth of 50 percent, which was due not least to the very weak numbers from the previous year. There was light and shadow in the Netherlands; also strongly focused on alternative drives. The car market there started in January with almost 33,000 new registrations; an increase of 6.5 percent compared to 2022. Similar to Germany, a strong December was followed by a slightly weaker January. According to Dataforce, purchases are also brought forward, so that the market performance should continue to improve in the coming months. However, there are major differences between the individual sales channels. The private market declined 15 percent, while rentals (-52 percent) and dealer and manufacturer registrations were up strongly, up 42 percent. This could indicate a trend for 2023 in which private demand could suffer from the difficult economic environment, while the easing supply constraint allows for additional tactical approvals.
In percentage terms, the analysts at Dataforce see the greatest potential for growth in car rental companies. Since 2020, these have reduced their vehicle stock so much that rental cars have become a scarce commodity. Therefore, landlords will seize the opportunity and replenish their inventories while demand from other channels wanes. However, manufacturer and trade approvals are also likely to increase again in 2023, because vehicle production can be ramped up again with better availability of semiconductors. In addition, the competition is increasing noticeably; also because more and more Chinese brands are pushing into Europe. Manufacturers will therefore again increasingly sell vehicles through dealers, where it is easier to work with discounts in order to increase demand. But before buyers can hope for higher discounts again, the backlog of orders must first be processed. These have reached 2.5 times the usual level over the past year. And many potential buyers have not even ordered their vehicles. The losses of the last three years have now almost reached the magnitude of a complete annual sales. The need to catch up will also support the market this year. Companies in particular have to regularly renew their fleets because many vehicles cover 30,000 km and more per year.
Including all of this, Dataforce and MSI are forecasting a volume of 12.7 million passenger cars for the 30 European markets considered in 2023. This corresponds to an increase of 13 percent compared to 2022. The market would still be 19 percent below the pre-crisis level. Following the EU’s most recent decision to largely ban new registrations of combustion engines from 2035, more vehicles will have purely electric drives. In 2022, the proportion of electric vehicles in the EU-30 was just 13.3 percent. In 2023, Dataforce predicts only a slight increase in the BEV share and a further decline in the PHEV share.
