Economy. New or used, why don't the French buy cars anymore?

The post-Covid surge in used car sales, coupled with a shortage of parts for new cars, now seems a long way off. After new vehicle sales, second-hand sales are also stalling. In July, the number of re-registrations was significantly lower than half a million units (489,465) and down 4% compared to the same month last year. All this comes after an already worrying June with a 4.8% decline.

Over the first seven months of the year, the results are hardly more encouraging, with a barely positive tally (+0.1%). For, on closer inspection, sales of very young vehicles, one year old or less, collapsed by 20.2%, and those of vehicles between two and five years old by 13.2%. It is to the sale of older vehicles 16 years old and over, up 10.9%, that the used market owes its balance.

How can we explain that the entire automotive sector is in such a slump, to the point where we might fear structural gloom? The first reason is inflation, around 25% over the past ten years, which potential buyers simply can't keep up with. "When you look at the price of a Clio, ten years ago, it was worth €15,000. Today, it's €25,000. Wages haven't kept pace with this increase. This explains why the average age of the French car fleet is eleven or twelve years old, whereas it was eight years old about fifteen years ago. We've probably hit a kind of low," argues Gaëtan Toulemonde, an automotive market analyst.

"We have high selling prices that are driving many motorists out of the market who either don't have the means, or who have the means but don't want to put that much money into a car," economist Flavien Neuvy also notes. "Consumers are making trade-offs." Selling prices are also the result of trade-offs... by manufacturers. " The semiconductor shortage has meant that manufacturers have favored models with the highest margins to the detriment of those with the lowest margins, therefore the most expensive vehicles," Gaëtan Toulemonde explains. "However, there is a fairly simple rule of three: every time prices increase by 1%, volumes decrease by 1%."

A reality that manufacturers have knowingly ignored when the economic climate was more favorable to them in order to maximize profits. "We've been through an exceptional period these past five years, with more customers than cars to sell, which has never happened in the history of the automotive industry," says Flavien Neuvy. "From the moment you have more customers than cars available, it encourages you to raise prices since there are always customers on the other side. Manufacturers may have had the illusion that they could raise prices without too much damage."

Since the automotive industry remains, by nature, a volume industry, a lack of volume creates under-capacity factories and unsustainable pressure on prices for the middle class, which usually drives the market. Especially since, in addition to rising prices, other factors come into play before walking through the door of a dealership, with motorists who already have a car showing a certain wait-and-see attitude, at a time when the choice of energy can prove complex.

"If you ask around, people who are thinking about buying a car are on standby because nothing really convinces them. They are keeping their vehicles longer, not knowing exactly what they will replace them with or not having the means," assures Gaëtan Toulemonde. Flavien Neuvy agrees: "There is uncertainty surrounding the future of the automotive industry. To put it more simply, people are skeptical about the idea of switching to electric. Many believe that regulations will change, that we won't ban combustion-engine vehicles in 2035, and that it is urgent to wait. This has a direct impact on sales volumes."

So many problems overlapping, posing a question that could prove existential for the entire automotive industry: who can still afford a car? "To bounce back, we'll have to solve certain problems," insists Gaëtan Toulemonde, whether they be cyclical, economic, or political. This is essential to get back on track with consumers' wallets.