Industry Trend Analysis - Positive Macroeconomic Fundamentals Lifting Sales Forecast - OCT 2017

BMI View : P ositive macroeconomic fundamentals in the form of low interest rates, falling unemployment and tame inflation will help support growth in consumer spending and in turn an expansion in new car purchases. As a result, w e are revising up ou r passenger car sales forecast to growth of 3.3% for 2017, up from 1.7% previously .

We are revising up our forecast for new passenger car sales in France to growth of 3.3% in 2017, totalling 2.1mn units, up from a previously forecasted 1.7%. This more upbeat outlook for car sales is based on our view that the country's improving economic outlook will help to entice consumers to buy new vehicles. For 2018, we expect car sales in France to grow by 2.9% as an uptick in inflationary pressures takes some steam out of consumer spending.

France's economy grew 0.5% q-o-q in Q217 and 1.8% y-o-y (representing the fastest expansion of the French economy since 2011), driven by an acceleration of fixed investment and export growth. This strong Q217 growth reading has led our Country Risk team to upgrade their real GDP growth forecast for 2017 to 1.7%, from 1.3% ( see ' Strong Uptick In Exports And Fixed Investments Confirming Economic Upswing ' , July 28). We believe that this healthy outlook for the French economy will help boost consumer confidence and in turn spending on big-ticket items. Supporting this view is official market data which showed that new passenger car sales in France grew 3.8% y-o-y in the first seven months of 2017.

Positive Consumer Outlook Lifting 2017 Forecast
France - Passenger Car Sales, Units
f = BMI forecast. Source: CCFA, BMI

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