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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