Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

New passenger car sales in France plunged 42.1pc to 103,635 units in August compared with the prior month, according to the latest data published by Comité des Constructeurs Français d’Automobiles (CCFA) on September 2.


While French new car registrations typically decline in August as citizens take their vacations, Davis Index believes the fall in sales last month was exacerbated by the end of a government-backed scrappage scheme on July 31.


In fact, new car sales have fallen 19.8pc compared with the same month last year as pent up demand and the 200,000 purchases incentivized sales incentivized by the scrappage scheme appear to have fizzled out.


The Ministry for Ecological Transition announced on July 27 that it would replace the initial scrappage scheme which ended on July 31 with a more restrictive “conversion bonus system” from August 3 onwards.


Under the scheme, French citizens are eligible to scrap diesels vehicles registered before 2011 and petrol models registered before 2006. In a bid to target lower-income buyers, the Government reduced the income ceiling for the new scheme.


Contingent on income, participants can receive either €5,000 or €2,500 for an electric or plug-in hybrid (PHEV). Meanwhile, purchases of diesel- or petrol-powered vehicles can be boosted by either €3,000 or €1,500, similarly dependent on income.


While an extension to the scrappage scheme, albeit to lesser degree, is positive for new vehicle sales and underlying steel consumption, more restrictive eligibility requirements will likely cap the strength of sale in months to come given that consumer confidence remains low.


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