The car market is recovering, helped by record sales of electric vehicles

After years of Covid, shortages of electronic components and falling diesel sales, the French car market appears to have finally found its trajectory in 2023 with a 16.07% increase in registrations compared to the previous year. A total of 1,774,729 new passenger cars were put into circulation last year, according to data published this Monday by the Platform for Automotive (PFA), which represents manufacturers and equipment suppliers and characterizes the vintage as “good.”

The fact remains that this good performance compares to 2022, which was disastrous with only 1.52 million units sold. And we’re still a long way off from the 2.2 million vehicles sold in 2019 before the pandemic.

Electric vehicles support the market

However, the market was driven by sales of electric vehicles, which accounted for 26% of total registrations. “This is a record, we have never had anything like this, the movement towards electrification is underway,” says Francois Roudier from the NFA. Specifically, all-electric vehicles accounted for 17% of new registrations, up 47% from 2022, and plug-in hybrids (vehicles that can operate in electric mode) accounted for 9% of vehicles launched (+34 %). .

In this category, Tesla crushed its competitors, taking 21% of the market. Then we find the Dacia Spring, but also the Fiat 500, Peugeot 208 or even the Chinese MG4.

However, such a significant increase, especially at the end of the year, in sales of electric vehicles in France, in contrast to what is happening in other European countries and the United States, was partly motivated by the entry into force of a new bonus for 2024. From December 15, 2023, this bonus includes an environmental rating based on CO2 emissions during vehicle production and transportation.

As a result, this premium is de facto reserved for models manufactured in Europe. This is why in the last quarter some manufacturers, such as Dacia or Chinese companies that are entering the market significantly, increased sales. In addition, the maximum amount was reduced by €1,000 for households whose annual basic income exceeds €14,089 per share, or €4,000 in assistance. However, an increased bonus of €7,000 is still on offer for more modest households.

In these circumstances, the two French manufacturers Renault and Stellantis should enter into a great battle in 2024, launching several models in two strategic market segments: small cars and SUVs: the electric Scenic against the electric Peugeot 3008 or even the new C3 Electric Citroën against Renault’s P5.

A grimmer forecast for 2024

However, it is likely that we will see a drop in orders in 2024, even if the government is counting on an electric car priced at €100 per month to support the market. “We are reaching a volume of registrations that will be structurally lower,” assessed François Roudier, noting an evolution in the market with falling sales of entry-level cars, while “we see a breakthrough: more expensive cars,” more expensive. but sold in smaller quantities.

Added to this is a drop in sales of diesel cars, which are still very popular in rural areas, but continued sales of gasoline cars, especially SUVs. In these circumstances, many motorists may be tempted to turn to the used market.