Gavekal Capital: Decent Gains in European Car Registrations Obscure Underlying Slowdown in Momentum

Thursday, July 17, 2014

Decent Gains in European Car Registrations Obscure Underlying Slowdown in Momentum

In June, new vehicle registrations in Europe maintained a positive year-over-year growth rate for the tenth month in a row-- a trend not seen since before the global financial crisis.

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Though registrations fell nearly 2% in Germany, trends remained more positive in the four other largest European economies.  Notably, vehicle registrations in Spain have experienced double-digit growth versus a year ago in each of the last four months.

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Renault continues to lead other auto manufacturers (as we discussed a while back, here), with registrations growing more than 20%yoy in June.

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Whether these positive trends can continue remains to be seen, however.  Sales in July and August are usually the weakest of the year.  In addition, a number of uptrends in our relative strength point-and-figure charts seem to be easing and/or encountering resistance more recently.

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As the charts illustrate, the average daily percent change for the group has declined from +0.13% over the longer-term (252 days) to -0.02% for the most recent 31 day period.

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On a relative basis, the average daily percent change has gone from a +0.7% to a -0.7% when comparing the longer-term to more recent moves in prices.

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