02.17.2021

EU January passenger car sales collapse on mobility restrictions, CO2 tax

By Jonathan Lopez

LONDON (ICIS)–The petrochemical-intensive automotive sector has started 2020 with a monthly fall of 24%, year on year, according to the European Automobile Manufacturers Association (ACEA) on Wednesday.

Around 726,000 cars were registered across the 27 EU countries in January, meaning that, in this industry, recovering to pre-pandemic levels is not yet a discussion point.

Renewed lockdown measures to contain the spread of the pandemic dented consumer confidence in January. Under the current restrictions, individuals in many areas are not even allowed to visit car dealerships as they are not deemed essential commerce.

Moreover, a tax being introduced in 2020-2021 on carbon dioxide (CO2) emissions, which many countries started to implement on 1 January, dented confidence further.

Under EU rules, in the 2020-2021 period all 27 countries will have to implement new CO2 targets for passenger cars, at 95g of CO2 per kilometre.

This emission level corresponds to fuel consumption of around 4.1l (litres) per 100km of petrol, or 3.6l/100km of diesel. For more on EU emissions rules, see the official website here (opens new tab).

The cost for each consumer at the time of purchase can go up by around €2,000 on average, according to industry estimates.

Spain’s case was representative of the negative effect of the pandemic and the new tax on car sales; automotive producers had feared the effect of mobility restrictions and the tax, and, to a lesser extent, the first month of both factors being applied together.

During 2020 they lobbied the Spanish cabinet for a postponement, to no avail; the country suffered the largest fall in car sales among the 27 countries in January, down 51.5%.

Automotive had already been one of the hardest-hit economic sectors during 2020; ACEA’s figures for annual production stood just below 10m units, 24% lower than in 2019.

The passenger car market is often taken as an indicator of financial confidence among individual consumers, many of whom delay purchases if confidence is running low.

ACEA’s forecast for sales of passenger cars in 2021 still drew a bleak picture for the sector; expected growth of 10% would not even remedy half of the ground lost to the pandemic in 2020.

The trade group is to release January data for commercial vehicles, those mostly purchased for professional purposes like vans, trucks and coaches, on 22 February.

The automotive industry consumes significant volumes of plastics, resins, rubber, and paints; an estimated 20% of European petrochemicals production ends up in the sector.


January passenger car registrations in Europe

This article appeared on the I.C.I.S. website at https://www.icis.com/explore/resources/news/2021/02/17/10607072/eu-january-passenger-car-sales-collapse-on-mobility-restrictions-co2-tax

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