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COVID-19: The market for luxury cars does not follow the same trends

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Update: 13th October 2020.
The market for automobiles has been affected by the COVID crisis, as have many other sectors. While annual sales are down for many manufacturers and dealerships, what about Luxury cars?

If you only have 30 seconds

 

  • The European (or even world) automobile market should fall by around 25% in 2020 compared to the previous year (ACEA).
  • This decline is the strongest ever recorded on the European automobile market.
  • While the world automobile market has been slowing down since 2019, the players in the luxury car sector do not seem to be affected (Lamborghini: +43%, Rolls-Royce: +25%, Porsche: +10%).
  • Manufacturers considered as premium (Mercedes, BMW, Audi for the German brands) see their figures fall in 2020 everywhere in the world, except in China where their sales are on the rise compared to 2019.

Summary

What was the world automobile market like before the COVID crisis?

Faced with constantly changing standards and tax incentives, which we detailed in a previous article, brands must, however, take steps and adapt to comply with new requirements, particularly European ones.

2018 sounded the downfall of the actions of the automobile equipment manufacturers, with its impact on the constructors. 2019, however, unfolded under better auspices. But this does not (or hardly) concern the brands of luxury cars.

What do we define when we use the term “luxury cars”?

The major brands of luxury cars are well known: Rolls Royce, Ferrari, Lamborghini, Bentley, and so on. These luxury vehicles are distinguished by their design, their options, but also by the number of examples put on the market. In short, it is the price and exclusivity that make them luxury vehicles and brands.

In 2019, the famous English brand, Bentley achieved almost as many sales in Monaco as in its four concessions located in Paris, Lyon, Bordeaux and Cannes. Culture, the absence of a national manufacturer, taxes and social movements, notably the yellow jackets, are called into question: luxury cars don’t seem to be the French people’s cup of tea. It should be noted, however, that the sales volume is on the rise for the majority of luxury car brands in France.

Brand Number of units sold in France in 2019 Evolution compared to 2018
Porsche 5 572 +22%
Alpine 3 172 +174%
Maserati 420 -31%
Ferrari 339 +26%
Lotus 190 +37%
Lamborghini 156 +93%
Caterham 101 +42%
Aston Martin 92 +10%
Bentley 84 +2%
Morgan 50 -18%
McLaren 24 -8%
Rolls-Royce 10 -38%
Dallara 1 n/a
KTM 1 -50%

In Belgium, the vision is somewhat different. In 2018, Porsche registered 3,222 vehicles in Belgium. However, many agree that Porsche is not one of the players in the luxury car market. And with good reason: the brand offers more “affordable” prices (at less than 100,000 euros) and produces many vehicles for sale, which makes the manufacturer a player in the premium segment, but is not considered by everyone to be a luxury.

New car registrations by brand in Belgium (source: Febiac)
2018 2019 Evolution in %
JAGUAR 3.957 3.174 -19,79
PORSCHE 3.222 2.754 -14,53
LEXUS 1.468 1.479 0,75
ALPINE 73 232 217,81
MASERATI 222 174 -21,62
FERRARI 100 127 27,00
BENTLEY 70 96 37,14
LOTUS 34 45 32,35
ASTON MARTIN 57 44 -22,81
LAMBORGHINI 22 33 50,00
ROLLS-ROYCE 15 30 100,00
MORGAN 27 24 -11,11
INFINITI 166 21 -87,35
MCLAREN 21 17 -19,05
ALPINA 15 11 -26,67
CATERHAM 8 8 0,00
CADILLAC 11 1 -90,91

What is the situation for the automobile market in 2020?

In the first half of 2020, car sales fell by 25% worldwide. Belgium is not to be outdone, with more than 26% fewer registrations than in 2019.

The number of Ferraris, Porsches or Lamborghinis registered in Belgium in 2020 does not seem to have been affected by the sanitary crisis. This can be explained in particular by a waiting time of up to 2 years between the customer’s order and receipt of the vehicle. The effects of COVID-19 on luxury vehicles will be more visible on the annual turnover and the number of registrations in 2021 or even 2022.

What’s happening in the international automobile market?

The Chinese automobile market, which experienced the sanitary crisis and was confined well before Europe, is showing signs of recovery with +7% sales in June 2020 compared to the previous year despite a general drop in sales volumes (-13% compared to 2019).

Region Vehicle sales (2019, in millions of units) Vehicle sales (estimation for 2020 in millions of units) Difference (%)
China 25.7 21.9 -14,8%
US 17.6 13.4 -23,9%
Europe 18.3 13.6 -25.7%
The rest of the world 26.4 23.0 -19%
Total 90.0 71.9 -20,1%

The United States sees its figures drop drastically, with -19% of sales in June 2020 compared to June 2019. Counterpoint estimates that by the end of 2020, the United States will see an annual drop of 24%, which, to date, is very close to the global data announced and estimated by experts.

Vehicle sales have fallen by 36% in Europe since the beginning of 2020. The recovery is also insight with the reopening of dealerships since June 2020. However, the annual loss will be considerable for the automobile sector, which has already faced significant standardisation challenges in 2018 and 2019.

The ACEA (European Automotible Manufacturers Association) has counted the number of registrations in Europe during the COVID crisis.

Commercial vehicle registrations (Europe, compared to 2019) Private vehicle registrations (Europe, compared to 2019)
January 2020 -11,5% -7,5%
February 2020 -6,2% -7,4%
March 2020 -47,3% -55,1%
April 2020 -67% -76,3%
May 2020 -44,4% -52,3%
June 2020 -20,3% -22,3%
Cumulative 1st half-year 2020 -33,7% -38,1%

ACEA estimates that new vehicle sales in 2020 will be the lowest recorded since 2013, following a six-year decline following the 2008-2009 crisis. (ACEA)

Compared with the same periods in 2019, France recorded a 72.2% decline in private car sales in March 2020, -88.8% in April and -50.3% in May (Auto Moto) for a cumulative decline of 32% in the first half of 2020 compared with the first half of 2019.

The Belgian automobile market in 2020

Sales forecasts for 2020:

  • Philippe Donnay, Commissioner for Plan, believes that the year 2020 will be the most substantial recession Belgium has ever experienced.
  • Febiac forecasts that 431,000 new cars will be put into circulation in 2020, a number well below the lowest record recorded in Belgium to date (458,796 new registrations in 2003). We will have to wait until the end of the year to confirm these figures.

Leasing:

  • The professional leasing market has dropped by 20% due to a drop in recruitment, business travel and the practice of remote working.

They are doing well:

  • The Ginion group (7 establishments + 9 showrooms) recorded good sales and believes that this is mainly because their customers are among those who have been little affected by the health crisis.
  • Ferrari’s sales are on the increase in 2020 compared to 2019.

Prospects for the recovery:

  • The recovery recorded during the summer fell back with the end of the summer and promotions. The economic uncertainty is also impacting customer behaviour, which is developing a fear of committing to expenditure involving them over the long term.
  • Experts and players in the automotive market consider that it will take about 3 years to see a full market recovery.

Conclusion

The volume of vehicle sales, whether for commercial or private use, has been in freefall around the world since the outbreak of the health crisis. The Chinese market, having been the first to be confined and deconfined, is also the first to reinvest, and we are seeing the figures in Europe recovering gradually. However, the recovery of the automobile market will be a long haul since the new WLTP standards also have an impact on car manufacturers. The consequences on the luxury car market will be concretely visible from the turnover generated in 2020 and the registrations of 2021 and 2022, given the delays in the acceptance of these vehicles in their own right.

Images: Shutterstock

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