Industry Trend Analysis - Robust Household Demand To Keep Growth Positive - MAR 2018

BMI View : The demand for passenger vehicles will continue to grow in 2018, albeit at a slower pace due to demand from rental agencies winding down, however, robust household demand for new cars will keep growth positive.

We forecast passenger vehicle sales in Portugal to grow at a more subdued pace, of 4.0% in 2018 and 0.5% in 2019, as the support from rental fleet acquisitions ease off. That being said, we believe that passenger vehicle sales will continue to receive support from rent-a-car companies as they make their final renewing and expanding acquisition to support the robust tourism industry as well as a general uptick in consumer demand for new cars.

The influx of tourists into Portugal which has been playing out since 2014 will continue to support demand for new cars, through its effect on the rental car market channel. As we have seen in other EU markets such as Cyprus and Iceland, tourist arrivals into Portugal have shown strong growth in 2016 and 2017 as tourists increasingly shun holidays in North Africa and Turkey to avoid heightened political and terrorism risks. We believe this trend will continue in 2017 and 2018 with tourist arrivals to Portugal expanding a further 7.8% in 2018 and 7.4% in 2019 as terrorism threats and political instability in Turkey and the MENA region remain heightened.

Subdued Growth Ahead
Portugal - Passenger Vehicle Sales
f = BMI forecast. Source: ACEA, BMI

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