The European new car market continued to struggle in the first half of this year due to the ongoing global semiconductor shortage, increasing economic uncertainty, and the impact of Russia’s invasion of Ukraine. It is now easier for consumers to buy second-hand than brand-new vehicles, and consumers appear to be losing faith in dealerships due to the relative lack of availability.

These challenges come in addition to upcoming emissions regulations and the resulting pressure on combustion engine cars around the world. Within this context, the European new car market showed both worrying and interesting trends during the first half of this year. These are the results by segments:

SUVs at record market share

The surging popularity of SUVs is no longer an emerging trend but rather a well-documented reality for the European automotive market. During H1, SUVs accounted for 49.5% of all new car registrations – approximately 2.74 million units. While volume fell by 4% compared to H1 2021, the decline was significantly lower than the overall market variation of -14%. The reasons for this remain unchanged – that being greater choice, improved product offerings, and consumer preference for a higher driving position.

Compact SUVs (C-SUV) were a key driver of success for the industry with 1.26 million registered units, or 46% of the total, due to the wide range of fully electric models available. B-SUVs – the smallest within the segment – followed with 1.04 million units, boosted by the arrival of new important players such as Toyota.

Decline of small cars

The popularity of SUVs comes at the expense of smaller cars. The registrations of city-cars (A segment), subcompacts (B segment), and compacts (C segment) declined by 22% in H1 2022 to 2.05 million units. The three segments combined accounted for 41% of total market volume in H1 2021, and 37% this year.

City-cars registered the deepest decline (-27%) from 455,400 units in H1 2021 to 331,200 in H1 2022. With many brands vacating the segment, the choices have fallen to just 13 models, 3 of which are also soon to leave the segment. The reduced offer is allowing more expensive models to take the lead, such as the Fiat 500, however, high prices ultimately lead to lower demand.

This is also the case in the B segment, which has been impacted by the popularity of B-SUVs. Some OEMs have made decisions to upgrade their B segment cars by including additional technologies and features leading to higher prices. The impact is one of reduced demand. By June this year, demand in the B segment fell by 19% to 959,000 units – worse than the total posted by the segment in H1 2020, when the worst of pandemic hit the industry.

Looking at the C segment, the decline in registrations was driven largely by a lack of popularity for the current generation of the Volkswagen Golf. In addition to software and chip production issues, Volkswagen is also dealing with a significant shift, with customers transitioning away from the Golf to SUVs. In fact, the Golf was not Europe’s most registered car in H1 2022, and it looks unlikely to secure the top spot by the end of the year.

MPVs become an endangered species

The situation for MPVs is even more complex. They are less appealing to consumers than SUVs, being less comfortable and simultaneously more expensive than the van-derived passenger cars. Through June, their registrations volume dropped by 28% to just 92,600 units, or 1.67% of total market. In H1 2015, their market share was 10.86%.

In 2015, there were 42 different MPVs available, while today consumers can choose from just 20 models. Similarly, in H1 2015, there were 3.9 MPVs for every van sold, while today there were just 1.8 vans sold for every MPV.

1 in 5 vehicles electrified 

The current challenges faced by the industry seems to have created ideal conditions for the growth of low emission vehicles. The 9% volume increase recorded in H1 2022 is the result of several factors. The first and most important being support from governments, boosting demand through their incentives programmes.

This boom is also strongly related to the availability of new models. Up until May, it was easier to purchase an all-new electric car, than gasoline or diesel vehicle. However, this availability has started to deteriorate, with June posting a decline in registrations.

Finally, EV growth was also driven by a more competitive offer, including better range and lower prices. During the first half of last year, consumers in Europe had approximately 66 different pure electric models to choose from. Today, they have around 90 options.