Following a contraction of around 26% in 2020 things can only get better. But how fast will the recovery be and what is the outlook for the channels?
Slow start, rev up
We expect the first half year of 2021 to remain rather challenging. Strict Containment measures will probably need to be maintained into spring, which will weigh down economic sentiment. At the same time, early 2021 may not be the best time for car purchase from a taxation perspective: Some countries terminate their crisis support for the car market while others are tightening their CO2 taxation rules.
However, dealerships and leasing operators have established systems to maintain car sales over a lockdown. The complete loss of one or more sales months will not to happen again in 2021. Meanwhile the economy is going to rev up over the course of the year and this recovery will be accompanied by pent-up demand. By and large, we expect a growth around 17% for the EU5 plus Belgium and the Netherlands, pushing the market to about 85% of 2019 registrations.
True Fleet Market to recover faster than private demand
As seen in the follow-up to the Eurozone crisis, the True Fleet market will again be the first channel to rebound. The 2020 leasing contract extensions will add up to an above average replacement activity in 2021. While fleet operators are looking for cost savings, most of them will focus on reducing operational costs or downsizing cars rather than reducing the overall number of cars in their fleets. We also see companies embracing electrification as they are poised to reduce their CO2 footprint. This makes a fertile ground for the broad government support schemes supporting BEVs and PHEVs as company cars.
In contrast to that, private car buyers can and will delay their car renewals a little longer and have a tendency to turn toward the used car market when they need to tighten their belts. The expirations of scrapping schemes and other measures that were particularly dedicated toward private buyers in 2020 will also contribute to slow the recovery.
RAC and dealerships/manufacturer registrations seeing the highest %-growth
Short-term rental cars suffered the biggest blow in 2020. Coming from such a low base, this channel will see a larger growth rate than the private or the True Fleet market. Many companies have reduced their fleets to the lowest numbers they could while remaining operational. While 2021 will certainly not see an immediate rebound of rental bookings to the pre-crisis level, RAC companies are going to need additional cars to serve demand.
The last market segment to consider are Dealership and Manufacturer self-registrations. Here we see even stronger base effects. Stock reductions and supply constraints have broadly limited registrations in this channel over 2020. Next year, the challenge will be to keep up production utilisation rather than just producing a sufficient number of cars. Furthermore, dealerships will no longer face the risk of sitting on stocks over a new lockdown and OEMs must actively steer their registrations towards tightening CO2 emission targets. Hence, we are likely to see a higher share of new cars to arrive on the market as tactical registrations rather than being directly registered by the actual driver.