ExpertEye European Automotive Report Q1 2017 | Page 21

Despite the political uncertainty and low rate of GDP growth, manufacturing confidence remains
high underpinned by an anticipated rise in exports and investment. The public deficit remains high
and with the latest EC figures still forecasting it to worsen in 2018. Part of the reason is the easing
of the tax burden with corporation tax dropping from 27.5% to 24% in April plus the scrapping of
the January 2017 VAT increase.
The Italian new car market rose 16.4% in 2016 and as predicted the removal of the threat of the
January VAT rise saw a slowdown in growth which has continued in 2017 with YTD sales to April up
only 8% and a 4.6% fall in April itself. However, law decree 50 which was enacted by parliament in
April proposes that if budgetary targets are not met VAT will rise from 22% to 25% in January 2018.
This threat hanging over big ticket items makes forecasting 2017 sales challenging. Should the
fiscal requirements be met and more importantly be seen to be on target by mid-year we anticipate
Italian new car sales to grow by between 9%-10%. However, should the economy not be meeting
expectations and the VAT rise looks likely then we expect growth to be in the range of 15%-20% as
demand to beat the rise pushes sales. The industrial confidence can be seen in commercial vehicle
sales which have grown by 9.4% in Q1 and this level of growth is likely to remain throughout the
year although like with car sales the likelihood or otherwise of the 2018 VAT rise could change
that.
RVs have finally just about recovered to pre-crisis levels in Italy and we think they will remain flat
to a small 0.5% to 1% rise at most over the next twelve months. At a brand level only Mini and Fiat
have seen significant downward pressure amongst the top 10 due to some ageing models which is
also the reason behind the falls in Small and Compact SUVs.
European Automotive Report - 2017 Quarter 1
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