In September 2024, new car registrations in Europe saw a 6.1% decrease, amounting to 809,163 units, according to data released by the European Automobile Manufacturers’ Association (ACEA). This marked the first time in over two years that Europe experienced several consecutive months of declining new car sales, with the last similar downturn occurring in mid-2022.
For the first nine months of 2024, nearly eight million new cars were sold across Europe, showing some resilience despite the recent declines. However, specific countries experienced significant reductions in new vehicle registrations. France reported an 11.1% drop in new car sales, Italy saw a 10.7% decline, and Germany—a key player in the European car market—registered a 7% fall. In contrast, Spain saw an increase in new car registrations, growing by 6.3%.
One of the key changes in the market has been the shift in demand for electric vehicles (EVs). In September 2024, EVs accounted for 17.3% of the European Union’s car market, compared to 14.8% during the same period last year. Despite this growth in market share, the total volume of electric vehicle sales from the start of the year fell by 5.8%. The overall market share of EVs decreased slightly, from 14% last year to 13.1% in 2024.
Sales of plug-in hybrid vehicles also declined significantly, with registrations down by 22.3% in September. Traditional petrol-fuelled cars were not immune to the downturn either, with a 17.9% decrease in sales reported for the same period.
Factors Contributing to the Decline
Several factors have contributed to this downward trend in new car sales across Europe. One of the primary causes is the ongoing economic uncertainty affecting consumer spending. Rising inflation, high interest rates, and a general cost-of-living crisis have made large purchases, such as new vehicles, less appealing for many consumers. With household budgets tightening, people are either postponing the purchase of new cars or opting for more affordable used vehicles instead.
Additionally, supply chain disruptions that have plagued the automotive industry since the COVID-19 pandemic continue to have lingering effects. Although the semiconductor shortage that severely impacted production has eased, other logistical challenges and increased production costs have kept prices high for both manufacturers and consumers.
The gradual transition to electric vehicles has also created market volatility. While governments across Europe are pushing for greater adoption of electric and hybrid cars to meet climate goals, the infrastructure to support widespread EV use, such as charging stations, is still underdeveloped in many regions. This has caused hesitation among potential buyers, leading to slower growth in EV adoption than expected.
Moreover, the cost of electric vehicles remains a significant barrier for many consumers, despite the long-term savings they promise in terms of fuel and maintenance. The initial price point for EVs, even with subsidies and incentives in some countries, is still higher than that of conventional petrol or diesel cars. As a result, the shift to more environmentally friendly vehicles has not fully offset the decline in traditional car sales.
Regional Disparities in Car Sales
The varying performance of car sales across different European markets highlights regional economic differences. France and Italy, where car sales fell sharply, are both facing economic challenges, including high inflation and sluggish economic growth. Germany, Europe’s largest economy and a major hub for the automotive industry, has also seen a slowdown, reflecting broader concerns about the health of its manufacturing sector.
Spain’s contrasting increase in car sales suggests that its economic conditions may be more favourable or that local market dynamics differ significantly from those in other major European economies. The country has seen stronger consumer demand, possibly due to its recovering economy and targeted incentives for vehicle purchases.
The downward trend in new car sales is expected to continue in the short term, with no immediate resolution to the economic challenges currently facing the European market. However, industry experts remain cautiously optimistic about a potential recovery in 2025, as supply chain issues are gradually resolved and the transition to electric vehicles gains further momentum.
Governments and manufacturers are likely to continue pushing for policies that promote the adoption of electric vehicles, including incentives and infrastructure development. However, balancing the need for affordable vehicles with environmental targets remains a significant challenge for both the automotive industry and policymakers in Europe.
Image source: treadfirst.co.uk
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