New car sales plummet, old opportunities hold up

No, it still won’t go away! The automobile is seriously broken down. The French market again suffered a severe fall (-16.3% to 772,000 new car registrations) in the first half as well as in the month of June alone (-14%). And this, while it is generally one of the best months of the year! The half-year market even plunges by a third compared to the first six months of 2019, before the pandemic. “We are back to the figures of the 1970s”, notes François Roudier of the PFA (French automobile platform). Stellantis, which holds a third of the French market, is in particular in marked decline over the half-year (-21%), with a net erosion of Citroën (-25%) and Peugeot (-22%). Renault limited its fall to 10.7% over six months, the rise (+2.7%) of Dacia cushioning the -16.6% of the Renault brand itself.

In utilities, it’s even worse. The plummeting of the tricolor market reached 24.4% over the half-year (to 183,700 units), 22% in June. The shortage of semi-conductors and its corollary the sporadic closure of manufacturers’ assembly plants are largely responsible for these phenomena. But the lack of parts does not explain everything. “We feel a certain wait-and-see attitude from customers since May,” underlines Stéphane Magnin, commercial director of Suzuki France. Because of the serious deterioration of the economic situation but also of the uncertainties on the motorizations with the threats weighing on the circulation of the diesels in the big cities, like that brandished by the town hall of Paris.

Inflation of transaction price

“The rise in interest rates for loans but also the rise in the selling prices of vehicles can also represent a brake”, indicates François Roudier. The very sharp rise in prices practiced by manufacturers to maintain their margins despite the fall in volumes was reflected in the first half in particular by a marked decline in small cars, which now only represent 55% of the new car market in France. Against almost 60% two years ago. Compacts, on the other hand, grew to 26% of the total market, compared to 23% in 2020. The cheapest versions were most often removed from catalogs. Manufacturers are more willing to deliver bigger, better equipped, and therefore more expensive cars, to the detriment of the production of city cars.

This is what Carlos Tavares, general manager of Stellantis, calls “Pricing power” (the power to raise prices), as he hammered it last Wednesday during a meeting with the press in the mechanical factory in Metz. Thomas Besson, automotive specialist at Kepler-Chevreux, highlights “high selling prices and a virtual absence of discounts”. The increase in the average price already reached 6% in France in 2021, after a 6% rise the previous year, according to IHS Markit. “As in the United States, the market is now aimed at people who have the means”, underlines François Roudier.

Electrification inflates prices

Even Dacia, Renault’s low-cost Romanian subsidiary, is raising its prices. The Dacia Sandero is thus accessible today from 10,790 euros. The base price of the city car did not exceed 8,290 euros at the start of the 2020 school year, 8,890 barely a year later, in September 2021. It was last January that the Sandero made a big leap forward in price, passing all a shot at 9,990 euros. Before quickly taking 800 euros more. A Dacia Duster SUV is now available from 15,490 euros. Or… 3,000 euros more than at the start of the 2021 school year. In addition, the forced electrification of sales greatly increases price inflation. Electric and rechargeable hybrids now claim 20% of the French car market. However, an electric Peugeot 208 is worth twice a basic petrol 208 (from 33,950 euros, against 17,500). A compact 308 plug-in hybrid is available from 39,850 euros, compared to 25,700 for the cheapest gasoline version.

In response to the fall in the market, the second-hand market also fell, victim of a shortage of cars! However, it “falls less (-12% in the first half to 2.7 million car transactions)”, according to the AAA data compiler. These vehicles still represent four times the new market and almost seven times the sales of new vehicles to… private customers alone, excluding fleets. Those who do best are the oldest used vehicles (more than ten years), which decline by only 7% according to AAA statistics. The latter represent half of used vehicle transactions!