ExpertEye European Automotive Report Q3 2016 | Page 27

England ’ s 2 % target . The negative impact on domestic demand may yet outweigh the benefits of increased exports and as such 2018 is more likely to grow at a similar rate to 2017 . Of course the great unknown remains the results of the French and German general elections , the Italian referendum and the rise in protectionist and nationalistic attitudes . Should a Trump style backlash happen in any of these then we may see a far more accommodating EU resulting in a boost for all .

The strong pound has made the UK a cheap place for OEMs to offer high discounts whilst retaining reasonable non-sterling bottom lines . This has meant the UK has been awash with heavily subsidised finance deals on new cars as well as a significant number of pre-registrations and dealer demonstrators . However with the sterling fall we are now seeing a downturn in sales as OEMs look for cheaper discounted sales in the euro zone . Car sales grew by just 1.4 % in October and by the end of the year the UK is likely to be ony around 2.5 % above 2015 levels . Going forward the current round of OEM budget setting for 2017 is likely to be factoring in sales decline in 2017 , excluding any growth driven by new product introduction . With the weak pound and other econmic factors new car sales look likely to drop by 4.2 % next year and a further 5.1 % in 2018 although this still leaves sales of around 2.5 million . CV sales are following the slowdown in growth seen in car sales , dropping 6.4 % in October with a full year forecast of around 2 % growth over 2015 .

Whilst RVs rose this quarter some of this was a typical market realignment to heavy drops earlier in the year . Our overall view is still for a 2pps drop over the next twelve months . But the UK typical volatility and Brexit uncertainty means a short term dip of up to 7-8pp for a 3 to 6 month period over the next three years is highly likely .

Source : Experteye AG

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