Economy 21 June 2024, 7:00pm

Electric cars have yet to 'change the world' in Europe

Portfolio

The latest data for new passenger car registrations in the European Union show that Japan's Toyota has grown substantially and its market share has increased in May 2024 at the expense of its European rivals. This must be linked to growing demand for hybrid electric vehicles (HEVs), an area where Toyota has immense experience, as well as both technological and commercial advantages. Almost every third new car registered in the EU was a HEV last month. Meanwhile battery electric vehicles (BEVs) have been losing ground. Cars with the 'damned' diesel engines saw a higher number of new registrations in May than BEVs, according to the latest report by the European Automobile Manufacturers' Association (ACEA)..

In May 2024, car registrations in the European Union decreased by 3%, with declines observed in three out of the region’s four major markets: Italy (-6.6%), Germany (-4.3%), and France (-2.9%). Spain, on the other hand, achieved a modest growth of 3.4% last month.

New passenger car registrations in Hungary grew by 5.7% to 9,531 units, a lot less impressive figure than April's 21.4% yr/yr growth, although it had to do with the fact that there were two extra sales days compared to the same month last year, when Easter holidays fell in April instead of March.

Despite the downturn in May, year-to-date car registrations over the first five months of 2024 increased by 4.6% to 4.6 million units. The bloc’s largest markets all showed a similar performance, with Spain (+6.8%), Germany (+5.2%), France (+4.9%), and Italy (+3.4%) recording growth so far this year. Hungary recorded a 9.5% yr/yr growth to over 51,600 units, down from 10.4% in April.

The chart below shows the number of new passenger car registrations in Central and Eastern Europe in the fifth month of 2023 and 2024, as well as their yr/yr change. Austria and Slovakia were the only ones that did not record yr/yr increases in May, with Poland standing out in terms of the number of new cars registered and Croatia with a 19% yr/yr increase.

Brands

Of the major car groups, only Toyota (7.6% vs. 6.6% in May 2023) and Volkswagen (27.3% vs. 26%) managed to increase their share, while Stellantis, Renault, Hyundai and BMW lost market share, with the latter's sales being mainly affected by the collapse of MINI, where model changes largely explain the poor performance. Toyota has a huge lead over VW in the ranking of producers with the largest yr/yr increase in new passenger car registrations in the EU in May.

German premium car manufacturers BMW and Mercedes-Benz saw not only their market shares shrink (to 6.4% and 5%, respectively) but also their new car registrations drop by 17.7% and 3.6%, respectively.

Looking at the market shares in January-May, Toyota was the only one to increase it (to 8.0% from 6.9%), and its new passenger car registrations soared by 22% yr/yr, with demand for HEVs rising constantly.

New EU car registrations by power source

In May 2024, the share of battery-electric cars in new passenger car registrations was down at 12.5% from 13.8% a year earlier, while hybrid-electrics charged up to 29.9% from 25.0%. The share of plug-in hybrid vehicles shrank to 6.5% from 7.4%.

PETROL (35.5%) AND DIESEL (13%) COMBINED CAPTURED LESS THAN HALF THE MARKET (48.5%, FROM 50.8%).

For the first time since August 2023, the share of hybrid electric vehicles (HEVs) in total new passenger car registrations in Hungary came in lower (40.6%) than the combined share of petrol and diesel cars (46.1%).

The number of newly registered petrol cars showed a 5.6% yr/yr decline in the EU, while diesel car registrations dropped 11.4%, which compare with a respective growth of 7.3% and no change in April. The largest annual growth (16.2%) was observed in the registration of hybrid electric vehicles (HEVs), but this marks a major deceleration after a 33.1% jump in April.

However, it is clear that there are countries, especially in our region, where electric and hybrid cars are finding it harder to gain a foothold. In Bulgaria, for example, almost 93% of newly registered passenger cars had internal combustion engine in May, but in Slovenia, Croatia, and Czechia, this share was 82.2%, 73%, and 69.4%, respectively. In comparison, the Nordic countries typically see figures below or around 30% (18.6% in Finland, 21.9% in the Netherlands and 32.5% in Sweden in May).

Hybrid electric vehicles

Hybrid electric vehicles (HEVs) are becoming increasingly popular around the world, and this is also true in Europe, where 29.9% of all new cars registered were HEVs in May.

In Hungary, 40.6% of the newly registered cars were HEVs last month, with only five other countries higher in this particular ranking.

New HEV registrations in Hungary rose 14.5% yr/yr to 3,873 cars (down from +41.2% in April), which compares with a 16.2% average growth in the EU, down from 33.1% in April. Hungary finished in the middle of this ranking, up from the bottom of the top third in April last month.

Three of the four largest markets for this segment – France (+38.3%), Spain (+25.4%), and Italy (+7.4%) – recorded solid gains, while Germany experienced a slight decline of 0.7%.

Battery electric cars

In May 2024, registrations of battery-electric (BEV) cars declined by 12% to 114,308 units, with their total market share dropping to 12.5%. Belgium – now the third-largest market by volume for BEVs – and France were the only key markets to record growth, at 44.8% and 5.4%, respectively. In contrast, Germany (-30.6%) and the Netherlands (-11.7%) experienced significant declines last month.

From January to May, a total of 556,276 new battery-electric cars were registered, marking a 2% increase from the same period the previous year.

The countries that were at the bottom of the petrol/diesel ranking above are now at the top. Of the Nordic countries, Denmark (49.7%) has the highest share of purely electric cars in total new registrations, but the Netherlands and Sweden now have one in three new cars registered that are fully electric.

At the bottom of the list are the countries of our region, with hardly any BEVs sold in Croatia (265) and Slovakia (189) did not excel either. The big markets of Italy and Spain have not caught on to electric cars. In Hungary, 781 BEVs were newly registered in May, a share of 8.2%, up from 717 and 6.9% in April.

New BEV registrations in Hungary soared by 63% yr/ry in May, against a 12% drop in the EU. Note that the surge in Croatia and Malta marks the registration of only 265 and 181 purely electric cars, respectively.

Norway is often quoted as a prime example of going electric in driving, where the share of EVs in total new registrations remains brutally high. In May, the share was 77%, meaning that almost eight out of ten cars newly registered in Norway were purely electric. Plug-in hybrids represented a mere 5.3% of newly registered cars and the share for hybrid electric vehicles was 12.2% last month. The petrol and diesel shares were 1.3% and 4.3%, respectively.

Plug-in hybrids

In terms of the share of plug-in hybrid electric vehicles (PHEVs) of total new car registrations, Sweden came out on top with 23%, followed by Finland and Belgium. Hungary's share in this category was 4.9% in May (vs. 4.7% in April), while the EU average was higher at 6.5%, with 59,333 units sold, (down from 6.8% in April).

Plug-in hybrid car registrations also saw a decline of 14.7% last month, with significant decreases in two of the largest markets: Belgium (-36.6%) and France (-19.4%). Germany managed a modest increase of 1.7%, but this was not enough to offset the overall negative trend.

Only 468 PHEVs were newly registered in Hungary in May, versus 462 in the same month of 2023. This 8.3% increase comes on the back of a higher 14.6% growth in April.

New passenger car registrations in Hungary by fuel type

A total of 9,531 new passenger cars were registered in Hungary in May this year, 5.7% more than in the same month of 2023. This comes after a 21.4% jump to over 10,400 in April. Most new cars were HEVs (40.6%), followed by petrol (32%), diesel (14.1%), BEV (8.2%) and PHEV (4.9%). The evolution of these shares can be seen in the chart below. The race is clearly between HEVs and petrol cars, with the former coming out on top steadily since last July. The share of HEVs was also higher between November 2022 and May 2023.

As for the evolution of the share of the three main power sources (petrol, diesel, HEV) in Hungary's new passenger car registrations take a look at the three graphs below. The diminishing share of petrol engines year by year is evident, despite the fluctuations. The uptick for the second month in a row might be a warning sign if it weren't for the same pattern observed in the previous two years.

The share of diesel cars in new registrations has been showing greater fluctuation but the decline remains clear, albeit not as sharp by far as in the case of petrol-fuelled cars.

The share of HEVs has never been as high as in March for as long as the date series goes back (Jan2022), but it slumped back to 45.8% in April and further to 40.6% in May. Again, this also fits into the pattern of the previous two years and we should see a recovery possibly as soon as June.

There is also a slow increase in the share of battery electric vehicles (BEVs) in new passenger car registrations, with March standing out in the statistics. The May print is the second highest since January 2022.

No clear trend can be seen at plug-in hybrids, but if we had to pick one it's definitely not an ascending trend - it's rather stagnation at best.

It is worth nothing that the government launched an electric car subsidy scheme earlier this year, which has helped boost EV sales. As the scheme has not yet expired, it is expected to continue to have a positive impact on domestic EV sales for the rest of the year. The EU's additional duty on Chinese EV manufacturers does not help the spread of electric vehicles, though.

Hungary and its regional peers - May

We can and should and do compare Hungary's performance also in regional terms, both in respect of the actual number of cars sold (by fuel type) and the annual change in new registrations. Here we go:

Hungary and its regional peers - January-May

In the first five months of 2024, new passenger car registrations grew by 9.5% in Hungary to 51,611 units, including a 49.6% growth in BEV registrations, a 28.1% expansion at HEVs, and a 8.0% increase at PHEVs. Meanwhile, diesel car sales edged up 6.0% to 5,893 units and 13.1% fewer petrol-fuelled cars (15,363) were registered than in May 2023.