Industry Trend Analysis - Residential Construction Revival Good For LCV Demand - JUNE 2017

BMI View: Light commercial vehicle sales growth in Spain will outpace other commercial vehicle and passenger car segments in 2017 as demand is bolstered by a rise in residential construction activity. Adding to this, the Spanish commercial vehicle fleet is ageing at a fast pace, which increases the need for vehicle replacement through purchases of new vehicles.

As residential construction activity in Spain emerges from its multi-year morass, we believe this will also increase light commercial vehicle (LCV) demand in the country. As a result, we forecast LCV sales to expand 6.7% in 2017 to 183,770 units and to average 4.4% annual growth from 2017 to 2021; making LCVs the outperforming vehicle category for our five-year forecast period.

Our Infrastructure team have highlighted that after Spain's residential construction sector collapse in 2007 and its subsequent back-to-back years of decline until 2014, the industry has shifted into a recovery phase ( see ' 2017: Residential To Turn The Corner ' , November 24 2016). This will have a positive impact on the LCV market given that a large proportion of LCV sales are to tradesmen and small and medium-sized businesses operating in the residential construction industry. This is most clear when analysing the correlation between the growth in residential housing permits and the growth in LCV sales (lagged nine months to account for the time between permit approval and the beginning of construction activities requiring LCVs) ( see chart above).

LCVs Riding Recovery In Residential Construction
Spain - LCV Sales (lag 9mths) & Residential Building Permit Index, % chg y-o-y
Source: Eurostat, ACEA, BMI

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