June 5, 2018 / 4:38 PM / in 2 months

Western Europe 2018 car sales to be dampened by Italy, CO2: LMC

FRANKFURT (Reuters) - Car sales growth in Western Europe will be tempered this year by political uncertainty surrounding Italy and a new emissions test cycle which is leading to higher readings of carbon dioxide pollution (CO2), forecasters LMC Automotive said.

LMC has lowered its full-year forecast for 2018 sales growth in Western Europe to 1.7 percent from 1.8 percent last month, LMC’s European analyst David Oakley said on Tuesday.

Several carmakers including Volkswagen (VOWG_p.DE) have said they face challenges adapting their vehicle fleets to meet a new Worldwide Harmonised Light Vehicle Test Procedure (WLTP), which is based on real-driving data rather than theoretical scenarios. [nB4N0ZH05A][nFWN1S40LJ]

Because the new WLTP regime gives higher CO2 readings than the old NEDC system, it will force some carmakers to delay road certification and sales or push vehicles into a higher tax bracket.

“The elephant in the room at the moment is the response of national governments – and manufacturers – to the new WLTP emissions and fuel economy testing procedure, which has the potential to cause significant tax increases in countries which have taxation regimes based on CO2 emissions,” Oakley explained.

Western Europe sales in May were flat when compared to the same month a year ago, which LMC Automotive said was a good result given that there were fewer selling days than in the year-earlier month.

Sales in Italy, which was rocked by political turmoil last month, fell 2.8 percent in May.

Based on the seasonally adjusted annual selling rate (SAAR), demand improved to 14.8 million cars a year, up from 14.4 million vehicles in April, despite weak demand in Britain, which is down 6.8 percent year-to-date, LMC said.

Reporting by Edward Taylor; editing by David Evans

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