Industry Trend Analysis - Tax And Investment Incentives Key To Car Sales Growth - APR 2017

BMI View: In 2017, the gains from Italy ' s booming company car sales will be offset partly by slowing consumer demand for cars. With this in mind, we maintain our conservative 3.0% forecast for passenger car sales growth in the country for 2017.

In 2017 Italy's new vehicle market will be driven by attractive tax concessions for businesses purchasing new vehicles. The strength of demand from businesses will be key to driving growth in new car sales as consumer spending slows amid a decline in consumer confidence. With this in mind, we reiterate our forecast for Italian passenger car sales to grow just 3.0% in 2017, reaching almost 1.88mn units.

Sales of new cars in the latter half of 2016 were driven predominantly by demand from businesses rather than consumers and we believe this trend will continue in 2017. In 2016, sales of new cars increased 15.8% to 1,824,968 units and although consumer demand had driven sales in the first half of the year, sales to businesses became the strongest driver of growth in the second half of the year. To clarify, sales and leases to businesses grew 29.3% y-o-y in H216 compared to just 3.2% y-o-y for sales/leases to individuals ( see chart below).

Consumer Weakness Slowing Overall Gains From Business Sales
Italy - Passenger Car Sales Forecast, Units
f = BMI forecast. Source: ACEA, BMI

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