AUTOMOTIVE MARKET 2022: TRENDS AND OUTLOOK

Since the beginning of the health crisis, the automotive market has gone through major upheavals. At the end of the first quarter of 2022, one wonders if trends have returned to normal. Despite the encouraging signs of 2021, the recovery announced for the beginning of the year did not materialize. Despite everything, used cars seem to be the favorites of the French.

Auto market in free fall since January

With 102,899 vehicles registered in January 2022 against 126,381 in the same period in 2021, the automobile market recorded a drop of 18.6%. In January 2021, it was already recording significant losses compared to 2020. On the other hand, the second-hand market seems to have been less impacted, as it recorded a drop of only 9.8%. According to Argus, 3.9 used cars are sold in France for every new vehicle. Among used vehicles, there is a greater drop in sales for vehicles less than 2 years old.

Why is selling used vehicles the preferred solution for the French today?

Today, many reasons lead the French to prefer to buy a used vehicle. First, there’s the price. In fact, a used vehicle is much cheaper and it is possible to find a recent car at a very reasonable price.

A few years ago, many French people did not dare to buy a used car. With no mechanical knowledge to check the condition of a vehicle, they were afraid of fraud and bad deals. Today, platforms like autosphere allow individuals tobuy a used car with safety. Thanks to its network of professionals located throughout France (250 dealerships), all vehicles offered on the site are serviced and guaranteed to be satisfied or refunded.

Today, many French people want to buy a clean vehicle. Furthermore, since the beginning of the year, one in 10 new vehicles sold in France is 100% electric. However, in recent months, 100% electric and hybrid vehicles have entered the second-hand market and are offered at much more affordable prices. Today, the French do not hesitate to invest in electricity, because if they are more expensive, they later allow energy savings. This is an even more important issue since the beginning of the year with the rise in fuel prices.

Finally, to acquirea new or used vehicle today it is much easier thanks to the establishment of lease agreements. While you are not fully the owner of your vehicle, it does allow you to have one available and long-term choice to either exchange it or purchase it permanently. Leasing made it possible to limit the aging of the French car fleet and make the roads safer.

French manufacturers are heavily impacted

in the top 5 of manufacturers most affected by the crisis in the automotive sector, we find the three main French leaders. At the forefront is Peugeot with a drop in sales of 21.5%. Next comes Renault with -17%. Citroën, in turn, recorded a drop of 13.9%. Dacia, a subsidiary of the Renault Group that was behind the two best sellers in Europe with the Sandero and Duster, is in 4th position with a vertiginous fall of 34.5%. It is closely followed by the Toyota brand.

The impact of the Covid-19 crisis

The health crisis has impacted the automotive sector on several levels. For starters, the periods of confinement and the economic recession have led to a drop in purchases, both among individuals and among professionals. The sanitary measures implemented in the States during the successive waves of contamination impacted production chains that have not been able to operate at full speed for months. Finally, what most impacts the automotive sector today is missing components and in particular from microchips which slowed vehicle sales worldwide. According to the company AlixPartners. “Things should calm down in the middle of the year, but that doesn’t mean that other problems don’t appear, in matters related to raw materials, logistics or labor shortages” (comments collected by AFP).

Approaching presidential elections

It may seem surprising that the issue of presidential elections should interfere with an issue related to the car market. Especially when we are talking about a crisis of global reach. However, experts in the automotive field have noticed a phenomenon of falling new car sales with the approach of presidential elections each time. The French generally await the arrival of the first presidential measures to know the economic prospects.

In addition, the automobile issue was invited in the 2022 presidential campaign and most candidates want to support access to ecological individual means of transport. Many financial support measures are planned. That’s why many French people allow themselves a few more months before embarking on a new purchase.

Fears over tensions with Russia

Today, it is to be expected that the automobile market will be strongly impacted by the economic consequences of the conflict in Ukraine. In the current context, markets are particularly troubled and large French companies are about to temporarily sever their economic ties with Russia. Difficulties in the supply of many essential raw materials for the construction of new vehicles and delays in the production chain must be foreseen. Given this perspective, the French intend to turn to the used market to find a transitional solution and avoid the risk of extending the waiting period for orders for new vehicles. With occasion, vehicles are immediately available and usable.

The French car market was struggling at the start of the year, but it is a problem of global proportions. The outlook for 2022 urges consumers to exercise caution as they await signs of economic recovery.

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