ExpertEye European Automotive Report Q3 2016 | Page 25

limit on the budget deficit by a further 2 years Rajoy only has a minority government and with a need for ongoing reforms to cut the deficit there is a high degree of probability that he will be unable to see out a full term in charge , thus creating further market uncertainty .

Vehicle production remains a strong part of the Spanish economy as it is playing a key part in increasing exports so European vehicle sales growth remains critical . Domestically car sales rose 4 % in October which means a full year total of 1.15 million car sales looks likely , a rise of 11.5 % over 2015 . With the overall economy growing well new car sales are expected to continue to grow but at a slower rate over the next three years with a 9.4 % increase likely next year and just under 5 % growth in 2018 . Like Portugal , Spain also saw commercial vehicle sales falling in October , by 5.7 %. However some of October ’ s drop is believed to be timing issues and the full year is still set to see CV sales up 11 % over 2015 .

RVs increased again in quarter 3 , up 1 % as the general economic indicators look reasonably favourable . Apart from BMW and Mini , premium brands have seen some strong upward swings as car buyers and RV setters seem to agree on a brighter future and with it a rise in demand for upmarket makes . Audi has leapfrogged into second place whilst Volvo saw one of the highest increases in RVs with values rising almost 3 % partly due to the launch of a number of key new models . This makes Volvo the highest new entrant at number 6 . The A Class has also helped move Mercedes-Benz into the top 10 whilst Jeep , Lexus and Seat all drop out of the table .

We still expect values to remain relatively flat over the next year or two with increases just in line with inflation . But there is some upside risk associated with the potential removal or the Portuguese import tax which could push up RVs by an additional 1.5 % - 2 %.

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