Industry Trend Analysis - Commercial Vehicle Sales To Outperform Passenger Cars - MAR 2017

BMI View: Commercial vehicle sales growth will far outperform passenger car sales in Spain in 2017, growing by 4.1%. The commercial vehicle segments will be bolstered by a combination of rising construction and retail sector activity as well as a rising need for the replacement of Spain ' s ageing commercial vehicle fleet.

Due to stronger construction and retail sector activity and a greater need for replacement vehicles, we forecast growth in commercial vehicle (CV) sales in Spain to reach 4.1% in 2017 and to average 4.5% annual growth over the 2017 to 2020 forecast period. Breaking this down further for 2017, we expect light commercial vehicle (LCV) registrations to grow by 4.1%, while heavy trucks and buses both expand by 4.0%. These positive growth rates are a sharp contrast to the 4.7% decline we forecast for passenger car sales in the country as the removal of purchasing subsidies hits car demand ( see ' 2016 Car Sales Gain Foreshadows 2017 Trough ' , Oc to ber 6 2016).

CV Sales Take The Lead In 2017
Spain - Vehicle Sales Forecasts By Segment, % chg y-o-y
f = BMI forecast. Sources: National Sources/BMI

Over 2017, we believe sales will be bolstered by growth in the construction and retail sectors. Our Infrastructure team believe that the construction sector in Spain will accelerate in 2017 growing by 2.2%, compared to an estimated 0.9% in 2016, driven mainly by an uptick in residential construction. This will create a rising need for heavy trucks and LCVs used intensively in the construction industry.

At the same time our Country Risk team expect private consumption to remain the main engine of growth for the Spanish economy, which will bolster sales of CVs used in retail logistics, particularly vans. With consumers also turning more toward e-Commerce rather than buying at 'bricks and mortar' stores, demand for vans will increase given their better suitability to the home delivery logistics of online retailing.

Need For Replacement Is Growing
% Share Of Registered Vehicles Over Ten Years Old
e = ANFAC estimate. Source: ANFAC, BMI

Over our full five year forecast, sales of CVs will also be driven upwards by a rising need for fleet replacement. The average age of commercial vehicle fleets is fast increasing and, therefore, vehicles are more prone to breakdowns and more dependent on regular servicing. This is most obvious for LCVs and trucks (excluding road tractors), where vehicles over 10 years old accounted for 65.3% of the segment in 2015 compared to 39.2% in 2007. Thus, we believe the case for replacing a higher number of vehicles in 2017 will be much stronger for companies and fleet operators.