Hybrids, old used cars and pending deliveries due to the microchip crisis push car sales up

The automobile market has entered at a good pace in 2024. The growth in car sales in 2023 has continued in the month of January, establishing the hybrid vehicle as the most demanded option in the new car market. The normalization of activity after the pandemic, the microchip crisis, the outbreak of the war in Ukraine and the problems in the Red Sea has made it possible to unblock the demand retained in recent years and, at the same time, revitalize the second-hand market. hand thanks to vehicle injection. However, the car that is more than 15 years old continues to be the most purchased, a symptom that the renewal of the Spanish automobile fleet is still a pending task.

In January, 68,685 new passenger cars and SUVs were sold in Spain, 7.3% more than in the same month of 2023, according to data from the associations of manufacturers (Anfac), dealers (Faconauto) and vehicle sellers (Ganvam).. This dynamism with which 2024 has started continues the upward trend already undertaken in 2023. Last year, registrations grew by 16.7% compared to 2022, reaching 949,359 vehicles.

The automobile sector frames this increase in sales in a context of recovery after the pandemic that has not yet ended. In 2022, registrations barely reached 813,400 units, the lowest figure in nine years. Starting from that ground – and after two years below 900,000 annual sales – the growth recorded in 2023 was not enough to surpass the barrier of one million registrations, a level that the distributors' association does not expect to exceed until 2025.. Before the pandemic, between 2017 and 2019, more than 1.2 million new cars were sold per year. We will have to wait until 2029 to reach this goal again, according to projections, which estimate around 998,150 registrations by 2024.

“The market is recovering, but very slowly,” they say from Faconauto, while at the same time they attribute the growth in sales to the increase in the supply of vehicles once the stocking problems chained after the pandemic have been solved.. In this sense, the sector explains the increase in registrations in 2023 by the normalization of its activity, since the successive crises experienced between 2020 and 2022 made it difficult for cars to arrive at dealerships, preventing buyers interested in purchasing a new vehicle from being able to do it.

“We were stuck at home for half a year due to the pandemic, then we had the microchip crisis, which prevented us from manufacturing the number of vehicles that was demanded; that was followed by the war in Ukraine, which caused glass supply problems in many factories. for car windows; in between, the Ever Given ship blocked the Suez Canal and now ships do not circulate through the Red Sea due to the war between Israel and Gaza,” explains Félix García, director of communications at Anfac, who emphasizes the resilience of the automobile industry to survive this concatenation of crises.

“Now the market is normalizing. In the last quarter of last year we already noticed that more cars arrived at dealerships. We have put an end to the stocking problems and that is allowing a group of buyers who were planning to purchase their vehicle to do so,” Faconauto points out regarding the positive sales trend. “The new market is rising because there is a retained demand. Orders that were pending are being delivered,” agrees Tania Puche, Ganvam spokesperson.

The second-hand market

The reactivation of the new car market has also allowed for the revitalization of second-hand vehicle sales, whose recovery is being faster.. “Once the microchip crisis has been overcome, fleet renewal has been reactivated by all companies and rental companies, which last year had to retain their vehicles longer than usual because no new cars arrived.. Now these companies inject their used vehicles into the second-hand market, which means that the supply of vehicles up to five years old is growing,” explains the spokesperson for the sellers' association, who points out that the greater supply encourages purchases.

At the start of 2024, sales of used passenger cars have grown by 14.9% compared to January 2023, registering 155,888 operations. In 2023, the used vehicle market has already increased by 2.6%, remaining close to two million units. The forecasts for 2024 indicate that this level will be exceeded this year, although the market will still be 2.5% below pre-pandemic levels.

The increase in the supply of both new and second-hand vehicles has brought with it the de-escalation of prices. The lack of enough cars to cover demand caused new cars to become more expensive by more than 10% in the second half of 2022 compared to the price level of the previous year, according to data from the National Institute of Statistics (INE).. The CPI for second-hand cars continued to advance until the first quarter of 2023, when these vehicles were more than 16% more expensive than a year before. With more and more cars on the market, prices have been moderating, although access to financing remains difficult due to high interest rates.

An aging park

Despite the decrease in prices, the majority of buyers continue to opt for old second-hand cars. 39.9% of second-hand cars sold in January of this year were more than 15 years old and 16.2% were between 10 and 15. “For many, this vehicle that is more than 15 years old is the only mobility solution they have access to due to current prices,” Puche acknowledges.. The increase in older cars shows that the renewal of the vehicle fleet is still a pending task in Spain, even though there are increasingly more restrictions on their circulation in city centers.

“We are seeing that this volume of cars over 15 years old is not being reduced. Low-emission zones in practice are a regressive measure, because they are limiting the circulation of citizens who cannot change cars,” says the Ganvam spokesperson, who demands more aid for these buyer profiles, for example by encouraging the purchase. of used vehicles less than five years old. “Much more effective scrapping strategies should be implemented than those currently in place,” he adds.

On the other hand, non-plug-in electric hybrids are the option that has the most pull among new cars. In January, they represented 38.5% of sales, followed by gasoline. Electrification is still a pending task in Spain. In the first month of 2024, these models accounted for only 11.7% of registrations, far from the 20% share of the European average.. To accelerate the jump to electric vehicles, the automotive sector demands “decisive support” from public administrations, through direct and agile aid, but also through the expansion of the network of charging points. “For us it is essential to recover the market and to recover the market it is necessary to publicize in favor of the zero-emission vehicle,” García summarizes.