ExpertEye European Automotive Report Q2 2016 | Page 9

France could fall to fourth largest European market The suspension of a planned 2 percentage point rise in VAT is driving up new vehicle sales in Italy and should Italy continue to meet its economic targets next year could see a yet another postponement. With a potential for VAT to hit 25% in Italy in the next few years there has been such an increase in demand to beat the tax rise, in comparison to a more lacklustre French market, Italy could overtake France in 2018 to become Europe’s third largest car market although this is expected to be a short lived situation with France overtaking Italy again in 2019. Whilst this rise is expected to reverse sharply once the higher VAT rate is in place a fairly slow growing French market is likely to leave Italy and France at similar levels over the next 4-5 years. above 62 million for 2020 and 2021 despite falling new car sales predicted for those years. The much quicker new car sales recovery in the UK, following the economic crisis, will see the 2007 right hand drive car parc limit exceeded in 2017 with a peak of 13.64 million in 2019 before starting to decline as the impact of falling new car sales from 2017 starts to take effect. European Automotive Report - 2016 Quarter 2 14.00 Thousands be back to pre-crisis levels by 2019 and moving 1-5 year old car parc 70.00 12.00 60.00 10.00 50.00 8.00 40.00 6.00 30.00 4.00 20.00 2.00 10.00 0.00 2007 UK & Eire (RHD lines) 5 year old left hand drive cars looks on course to Mainland Europe LHD shaded areas) previous expectations of many, the car parc of 1- Thousands With 2015 and 2016 YTD car sales exceeding the 2008 2009 2010 2011 2012 2013 2014 LHD 4-5 years old LHD 3-4 years old RHD 1-2 years old RHD <1 year old LHD <1 year old RHD 4-5 years old 2015 2016e 2017e 2018e 2019e 2020e 2021e LHD 2-3 years old RHD 3-4 years old 0.00 LHD 1-2 years old RHD 2-3 years old Source: ACEA.BE – Historic data Bowkett Auto Consulting Ltd - Forecasts 8