Commercial car market must keep dealers afloat in 2015

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Cars parked next to eachother

Upcoming new regulations will boost commercial market in 2015, but reversal is expected in 2016.

Still some green lights in 2014

While sales figures for new cars have slackened in 2014, used car sales are what is keeping car dealers afloat at the moment. This was the second year in a row featuring a dramatic decline in new car sales, which caused short supply on the used car market. At the same time, demand for used cars increased, and combined these two factors resulted in price increases. Current prices have picked up by 8.2% since 2012, which is good news for dealers. Especially seeing that sales of new cars are projected to sink even below 2009’s dismal figure, when only 387,000 new cars were sold. But for the aftersales market, which is trendwise a shrinking market, the outlook is more favourable. ABN AMRO believes this segment could somewhat benefit from postponed maintenance in the short term. Returns are also boosted by increasing numbers of periodic vehicle safety and emissions tests. ABN AMRO is expecting this trend to stay on track for the next two years.

While private car buyers’ focus lies elsewhere, commercial buyers pick up the slack

Although consumer spending is projected to increase, ABN AMRO expects this to have little effect on car sales in 2015 and 2016. Buying a car is not high on consumers’ priority lists. Over a million homeowners are underwater, and many want to focus on getting their financial situation sorted before considering any big purchases such as a new car. Home sales are on the rise, and those who recently bought a new place are not likely to also buy a new car right away. The booming business of home renovations, for which an attractive 6% VAT-rate currently applies, is not helpful either. After all, money can only be spent once. Moreover, 2014 saw many people put their savings into the housing market via tax-free gifting. This money then becomes unavailable for other purchases such as new cars. And finally, there is the unemployment figure, which is expected to remain high despite an anticipated decline in the next two years.

For 2015, ABN AMRO is more optimistic about the commercial car market. In 2011 and 2012, new lease cars sold like hotcakes, and almost a third of the total car fleet was replaced. Their owners will likely start looking to upgrade to new models before 2016. In line with an expected increase in investments by companies, ABN AMRO also foresees a rise in sales of company-owned cars in 2015 and 2016. Moreover, many lease drivers with contracts expiring in 2016 are expected to renew their contracts in 2015, ahead of changes to Dutch tax rules regarding the percentage of the lease car’s value that is to be added to taxable income. The new rules will become effective as per 1 January 2016.

Slump in 2016 following rebound in 2015

ABN AMRO is expecting 450,000 new car sales in 2015, an increase of over 15 per cent compared with 2014. This figure is, however, still below the average of 480,000 over the past ten years. ABN AMRO is less optimistic about 2016, as purchases brought forward to 2015 will have consequences in 2016, leading to significantly lower sales volumes in the commercial car market. The bank does not expect the modest recovery in the private car market to be sufficient to offset this.

For more information please contact:

Chris Meijers
Sector Banker Retail ABN AMRO
E-mail
+31 6 10 28 35 04

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