The first half of 2024 has brought notable changes to the European automotive landscape. Economic recovery, evolving consumer preferences, and fluctuating finance trends are shaping the market in unprecedented ways. For automotive manufacturers, understanding these dynamics is crucial for adapting strategies and capitalising on emerging opportunities.
Our latest publication: European automotive finance market report highlights key developments in the finance space across several key European markets and what they mean for the industry. For full insights, download your copy here (https://www.jato.com/resources/reports-and-whitepapers/h1-2024-automotive-finance-analysis-in-europe)
The European automotive market has experienced an uplift in the first half of 2024, as EU’s economy showed a 0.3% growth in Q1, a trend supported by falling energy prices and reduced inflation. This economic stability has translated into a 4.6% rise in new car sales across the analysed EU7 markets (Germany, Great Britain, France, Spain, Italy, Belgium and The Netherlands), totalling 5,287,419 units.
Great Britain led the way with a 6.0% increase, while Germany saw a 5.4% rise. Despite this overall positive trend, Belgium and the Netherlands faced declines of 0.4% and 3.4%, respectively, underscoring the uneven nature of the recovery.
Despite the economic recovery, consumers are facing higher car purchase costs. The average monthly instalment for new cars across the EU7 has risen by 6.1% since the beginning of 2024. Italy’s highest monthly rates peaked at €1,393 in April. The Netherlands also saw a significant increase, with rates jumping from €1,160 in January to €1,420 by June. These rising costs highlight a broader trend of increasing car prices, even as flexible finance options like contract hire and contract purchase remain popular among buyers.
One of the more intriguing shifts in 2024 is the narrowing gap between the finance costs for battery electric vehicles (BEVs) and internal combustion engine (ICEs) vehicles. At the beginning of the year, BEVs were, on average, €201 more expensive per month than ICE models. By June, this gap had narrowed to €80. This change is driven by a 7% rise in ICE finance rates compared to a modest 1.7% increase for BEVs. The plateauing demand for BEVs and the growing popularity of hybrids—now accounting for 39% of “electrified” vehicle sales*—are contributing to this shift in finance costs.
*By electrified vehicles JATO mean the mix of the following powertrains: BEV, PHEV, MHEV and HEV vehicles
Premium automotive brands have seen continued demand despite rising costs. The average monthly rate for premium vehicles increased by over 10% in the first half of 2024, reaching €1,289. This is a slowdown compared to the 29% increase observed in 2023.
While premium brands maintain a strong market presence, volume brands have kept their finance rates relatively stable, with only a 2% increase. This stability is crucial as volume brands aim to attract cost-conscious consumers. Interestingly, premium BEV instalment rates fell by 1.4% in the first half of 2024, whereas ICE vehicles, including hybrids, experienced a 2.7% increase.
The D2 SUV segment remains one of the most competitive, with over half a million units sold in 2023. Tesla’s model Y led the segment with a 28% market share but saw a nearly 23% decline in sales in the first half of 2024.
This drop is partly due to reduced consumer demand for BEVs and external factors such as the withdrawal of government incentives in Germany in particular. In contrast, ICE models, including hybrids, increased their market share from 65% in H1 2023 to 70% of new private car sales in H1 2024 within this particular segment, despite a 5% rise in average monthly rates.
For OEMs, these trends underscore the need to remain agile in a rapidly evolving market. The rising costs and shifting consumer preferences towards ICE and hybrid vehicles highlight the importance of competitive pricing strategies and adapting to market demands.
While the recovery in new car sales presents opportunities, the increased cost of ownership and changing dynamics in BEV versus ICE finance rates will require strategic adjustments. Staying ahead in the competitive landscape means closely monitoring these trends and aligning product offerings and finance solutions to meet the evolving needs of the market.
For a deeper dive into these trends and their implications, download our full report to gain comprehensive insights and strategic recommendations tailored for automotive industry professionals.
https://www.jato.com/resources/reports-and-whitepapers/h1-2024-automotive-finance-analysis-in-europe