Danish new vehicle sales raced ahead over H115, against a backdrop of low interest rates and a recovering economy. According to figures from the Danish Car Importers Association - De Danske Bilimportorer (DBI), new vehicle sales rose by 8.3% y-o-y, to 123,513 units. Given this strong start to the year, BMI thinks the time is right to make a slight upward adjustment to our full-year forecasts. We are now targeting 7% sales growth for 2015, with commercial vehicles (CVs) set to outperform passenger cars (PCs), although PCs will still account for the lion's share of new vehicle sales in Denmark.
Breaking down the headline figure for the January to July period, passenger car sales stood at 104,862 units (+6.1% y-o-y). LCV sales were up by 19.3% y-o-y, at 16,109 units. HCV sales were up by 53.8% y-o-y, at 2,381 units, with bus sales falling by 14% y-o-y, to 161 units. Total CV sales stood at 18,651 units for the first half of 2015, up 22.4% y-o-y.
Overall, therefore, we retain our long-held constructive view on the medium-term outlook for Danish new car sales. BMI's Country Risk team believes that Denmark's economy will continue to gain momentum over the coming quarters, benefitting from stronger demand in its key export markets and the boon of negative interest rates and rising employment. Although the long-term economic outlook continues to be overshadowed by the highest household debt burden among OECD states (292% of gross domestic income in 2013), negative interest rates have seen a surge in mortgage refinancing so far this year. Coupled with improving labour market conditions, this will provide a tailwind to private consumption at a time when investment in the economy is growing.
BMI is forecasting 1.4% real GDP growth in 2015, rising to 1.6% in 2016, although growth may then begin to tail off somewhat, reflecting high household indebtedness, a lack of liquidity in the local treasury market (which could undermine the longer-term fixed investment outlook) and a volatile external economic environment within the eurozone.
Encouragingly for the autos sector, we believe that Danish households will be the primary drivers of economic growth in the coming years, helped by extraordinarily loose monetary policy and a pick-up in hiring. Employment rose to its highest level since August 2009 at the end of 2014 (2.76mn), and has remained elevated in subsequent months. Moreover, Danish mortgage lenders have been reporting the highest volume of early debt refinancing by borrowers in at least a decade since the start of the year. The country's presently negative domestic interest rate environment should also have the benefit of leading to lower car financing rates and act as a support to Danish new vehicle demand over the near term. Against this propitious backdrop, BMI forecasts private consumption growth of 1.5% in 2015, up from an estimated 0.6% in 2014, and rising further to 1.8% in 2016. This should provide solid support for passenger car sales over the balance of 2015.
Beyond the current year, BMI is currently targeting further growth, in the order of 10%, over the 2015-19 period to take new vehicle sales to above the 250,000 unit mark.
Within the passenger car (PC) sub-segment, over H115 German carmaker Volkswagen (VW) wrested back the local passenger car market leadership that it had lost to French rival Peugeot over Q115. VW sold 11,549 PCs over the first half of 2015, for a market share of 11%, although its total sales were down on the 12,000 PCs it sold over H114. Peugeot's total sales for H115 stood at 10,230 units (9.8% share).
Toyota retained third place in the top-selling brands chart over H115 (7,411 units; 7.1% share) underlining the recent progress it has made in this market. The company's Aygo and Yaris models are selling well, with the company also having recently launched new generations of its Auris and Avensis models in Denmark.
One noticeable trend within the Danish new passenger car sales market at present remains the replacement of mid-size sedans with smaller, more fuel efficient vehicles. This explains the strong year-to-date performance of Korean manufacturer Kia, whose Picanto and Rio models are currently selling very strongly in Denmark.
Electric vehicles also continue to grow in popularity, with Japanese automaker Nissan remaining the leading player within the Danish EV segment. In May 2015, car rental firm Avis Denmark ordered 401 Nissan e-NV200 vans and 60 Nissan LEAF electric cars from Nissan, in a move that will create the largest fleet of Nissan electric vehicles (EVs) in Europe. The new vehicles come in the wake of Avis' previous order of 400 Nissan LEAF electric cars in 2014, bringing its total fleet of EVs to 861 vehicles, according to a Nissan Europe company press release. The addition of the Nissan e-NV200 electric light commercial and passenger vehicle variants to its line-up is expected to help Avis meet demand in the Danish market.
Within the supplier sub-segment, in July 2015, it was reported that Danish auto software manufacturer Datamann has been bought out by Swedish company Vitec Software Group. Datamann produces Auto Vision dealership management system (DMS) software for use in areas such as: sales tracking, keeping on top of parts inventory and service follow-up.