STRATEGY: Renault champion of “fake” registrations

Renault Kadjar France May 2015. Picture courtesy largus.fr29% of Renault sales in Belgium are de-registered within 30 days.

What constitute “real” new car sales registrations? The first instinct would dictate to say these are sales to private buyers. If the answer is not so clearcut, it is critical to keep in mind that only half of European new car sales are actually private sales. Only taking into account private sales would completely (but rightly?) disfigure the European new car market, notably halving its size overnight. A bitter pill to swallow, and something most manufacturers prefer you don’t know. Just as an example, only 35.5% of new cars in Germany are bought by private buyers, and this figure is 53% in France in July, the first time in a while that private sales are back above 1 in 2 there. Specific tax legislation also has an impact on this figure, for example in Hungary where a huge 75% of cars are bought by companies, whereas these are in actual fact private sales that buyers have purchased through their company to avoid paying more tax.

Only taking into account private purchases would make Europe go back to a sales level equivalent to that of 40 years ago, and the most popular models and brands would also be very different, hurting domestic manufacturers at home, another reason to prevent them from advertising this “real” market too much. For example, the Dacia Sandero, 7th overall in France in July, is in fact the best-selling nameplate there with private buyers above the Peugeot 208, while the Renault Clio #2 overall is down to #4 and the Peugeot 308 #3 is down to #8. In Germany, whereas it is extremely difficult for a foreign model that sells outside Volkswagen dealerships (Seat, Skoda) to enter the monthly Top 20, these are frequent when looking at the private sales ranking, once again led by Dacia, along with Hyundai.

Dacia Sandero France July 2015. Picture courtesy of largus.frThe Dacia Sandero is #1 in France in July when only taking into account private buyers.

Non-private sales include sales to companies, less in touch with the reality of the market but nevertheless corresponding to a certain demand, even if dictated by different needs: those of businesses. Where things get more complicated is when more and more private consumers opt for the leasing option when they want to purchase a new car. This is categorised as a long-term rental and doesn’t fall into the private sales area, which is a contradiction. But until the way sales are reported is amended, this is what we data people have at our disposal to dissect.

Manufacturers have a lot more “leverage” (read capability to manipulate sales figures) when it comes to dealer and demo sales, as well as short-term rental sales. And this is where we start to encroach on a much more “fake” sales territory. Dealer and demo sales are widely used by manufacturers to boost their monthly results, but in a market such as France, they still represent just 13% of the market, limiting its potential leverage.

As for short-term rentals, they are a clear signal that a carmaker is trying to artificially boost their figures. Renault made a big deal a few years back to reduce their short-term rental sales. Why? Because by putting loads of cars on the used market that were not wanted by private consumers in the first place, it brings about devastating depreciation for the corresponding models. A poster child for this practice, Fiat holds 18% of the short-term rental sale market in France, whereas its market share with private buyers is just 1.3%! The same goes for Opel, a favourite of fleet buyers at home in Germany but disdained by private consumers and therefore struggling significantly with their brand image.

Ford Fiesta Czech Republic January 2015100% of the Ford Fiesta sold in the Czech Republic are re-exported.

What, then, is a “fake” registration? We can argue a car that is sold in one country but never sees its roads is one. The re-export phenomenon is particularly rife in Eastern Europe. For Bulgaria, where a rumoured 30% of new car sales are re-exported, we at BSCB always publish sales figures with a grain of salt. Latvia and Lithuania are other examples where re-exports completely bias the market. Since the start of 2015, for Czech Republic we now report official sales along ‘real’ ones, removing the vehicles that are de-registered within 90 days – in the case of this country this means they are re-exported and most likely ever see Czech roads in their lifetime. See also: Czech Republic January 2015: New figures unveil re-export culprits. Ford, with 61% of its sales re-exported at January 2015, Seat (53%) and Volkswagen (26%) are the most aggressive at “faking” their sales in the Czech Republic, with some models such as the Ford Fiesta, Seat Ibiza, Audi Q3, Audi A1 and Fiat 500L 100% re-exported (July figures).

lecho.be deregistrationsRegistrations (left) and de-registrations (right) in Belgium 2015 vs. 2014. Source: lecho.be

The last category of sales, which are not truly fake because legal, is when manufacturers register to meet sales targets and cash bonuses, then de-register these same vehicles within a very short period of time (on average less than 30 days) and sell them as used either in the same country or abroad. This practice is extremely common in Belgium, and the champion at this little sport is Renault, owned at 20% by the French state. According to Febiac and the news site lecho.be, out of 28.240 passenger car sales Renault sold over the first semester of 2015 in Belgium, no less than 8.226 were de-registered within 30 days – that’s 29% of its sales without an actual buyer. From #1 with 9.8% share, Renault drops to #4 with 7.5% in Belgium when these de-registrations are taken into account. We are now getting dangerously close to misleading practices that mask true results to please the stock market or, for that matter, sites like BSCB.

Fiat 500 France July 2015. Picture courtesy largus.frFiat is giving up de-registrations in Belgium.

The most recent example was Renault’s score at home in France in June, shooting up to 23.7% share only to tumble down to 14.7% in July, showing clear signs of “sales anticipation” (the politically correct way of putting it) that boosted its first semester results at home. In fact, on a monthly scale, Renault always back-loads its sales month after month, something visible in the intermediate weekly rankings we publish (see France 1-7 July 2015). While it became an automatic way of reading weekly sales at BSCB, this practice doesn’t match the reality of buyers purchasing cars at any given time in the month.

It is very difficult for a manufacturer to disengage from the de-registration practice as it will show frankly disappointing result the entire time it readjust to a normal reporting of salses. It is however possible: in Belgium, Fiat has decided in 2015 to give up de-registrations, going from 26% of its total sales to just 7%. Its 2015 results are showing the impact: the company is down significantly on 2014, but come 2016 its sales will return to normal.

See the Belgian article on Lecho.be: “La technique de fausses immatriculations are encore de beaux jours devant elle“. Many thanks to BSCB reader Guy for pointing this article out.

This Post Has 17 Comments
  1. Hi,

    We have to keep in mind that, in the European Union, a consumer can buy a product in any european country, and pay it VAT-free there, and then pay the VAT in his home country.
    At identical full price, it means that in countries with higher VAT rate, like Poland (23% rate ) or Romania (24% rate), the VAT-free price is in fact lower than in other countries like France (20% rate). But we know, that even with VAT, prices are lower in Eastern Europe.
    In France, there are companies specialized in that kind of business, buying cars in stock in Denmark or eastern Europe and re-exporting them to France, and proposing price reductions, up to 15-20%.

    Thanks fot the job, Matt! Keep going!

  2. exports of cars in days or even hours after registration is quite common all around eastern europe because of lower prices.
    poland, czech rep, slovakia, hungary, serbia etc… some brands like seat or fiat are exporting even more than 3/4 of official sales and all statistics are sometimes very different to reality.

    1. Thank you very much for this Roman.

      To all BSCB readers: we have now established with certainty the existence of re-exports accounting for up to 30% of total registrations in such markets as Bulgaria, Czech Republic, Latvia, Lithuania and Slovenia.
      Would anyone be able to point to us articles / commentaries that officially state the existence of this practice in other Eastern European countries such as Poland, Hungary, Slovakia, Serbia, Croatia, Estonia, Moldavia, Bosnia, Albania or Romania. We know it does exist there but we had difficulties establishing it officially through organisations that, for example, publish “real” figures monthly such as Madea in the Czech Republic.

      Thank you very much in advance.
      All the best,
      Matt

  3. Hi Matt,

    I come from Slovenia (eastern europe) and can tell you that companies register cars for one day and then export it. it is believed that the share of such “one day” cars is 20-30%! So, Slovenian official car sales are so 20-30% overrated!

    It’s not just Renault, more or less everybody is doing it!

    Keep up the good work!

  4. Bryan :
    In my opinion is not much accurate to say “Renault champion of fake registrations” based only in the Belgium market. To reach that conclusion, i think it would be necessary to know the rate of de-registrations in the major European markets.
    Other than the title, it’s a very interesting article as usual, Matt! Thank you!

    WHoops, either I didn’t see that the first time reading the article or it wasn’t there than. My bad.

    Talking about those registrations, same thing seems to be happening in Slovenia. Capture dropped a lot since last year and although you see lot of them I don’t think actual sales were that good. Another later example is VW Golf Sportvan, there can’t be so many in Slovenia, so is with Passat and Skoda Fabia is suspicious too.

  5. Belgium is a small market. It would be interesting to have this info for the big markets ( Germany, France, Italy, UK, Spain)

    Great article Matt!

    1. Hi Damic,
      Deregistrations seem to be a Belgian specialty…
      http://www.dhnet.be/archive/desimmatriculation-une-specificite-belge-51b7e49ae4b0de6db995779f
      Renault appears to be manipulating sales in many European countries as you can see this month in France and Norway for example.
      http://bestsellingcarsblog.com/2015/08/france-july-2015-renault-down-to-historically-low-14-7-share/
      http://bestsellingcarsblog.com/2015/08/norway-july-2015-mazda-cx-3-and-hyundai-tucson-land-with-a-splash/
      As for re-exports they mainly happen in Eastern Europe. Here again Renault is aggressive with the Renault Captur among the best-sellers (but only on paper, not in real life) in Bulgaria.
      All the best,
      Matt

  6. This trend especially in Belgium is playing a longer time that may also give a good image of why Belgium car sales are so high looking at the public size. I remember also Autowereld.be posting a article about it few days ago. – http://www.autowereld.be/2015/08/04/autoverkoop-belgie-eerste-zes-maanden/ The thing is many people from France buy their cars in Belgium because most cars are Cheaper than in France. And i don’t think many people from Germany or luxembourg buy their cars in Belgium as the most car prices are cheaper or about the same, and For the Netherlands market its For the Dutch people not really viable to buy a New car in Belgium and de-register it to the Netherlands because you pay their a heavy additionally bpm/C02 tax which Will make the car Price almost the same. So its more because the French, especially Renaults, Citroëns, BMW’s, Mercedes, Fiats and Porsche aswell are brought by the French people in Belgium thats perhaps one of the reason for the lower car Sales of Some models in France. I self asked in the Taiwan July post when i compared Some models sales with France and Taiwan which were higher in Taiwan despite lessen income & population. I also looked at autoscout24.fr few weeks ago and their were no less than 5-6 Mercedes S-Klasses on sale in France which were brought from Belgium but also few Mercedes E/C-Klasses, BMW 3/4/5-Series, Porsche Macans, Opel Mokka’s but aswell as Citroen C4 Aircrosses, Renault Scenics, Peugeot 3008’s etc. I think its bad for French auto dealers especially in northern France. And something France has to do against this For their Own car industry and also we would See a little bit higher sales because Belgium is not the only place where French buy new cars and de-register it French also buy cars in Luxembourg, Germany Maybe Italy also. I For example also know few people in France who brought their cars ( New/second Hand) in Germany.

  7. Well Renault would fell down to 4th place if no other manufacturer is doing doing this but seriously, do you really think that is the case?

    1. Blaz – Renault falls down to 4th place in the absence of de-registrations for all manufacturers – i.e. all things equal (see table).
      All the best,
      Matt

  8. In my opinion is not much accurate to say “Renault champion of fake registrations” based only in the Belgium market. To reach that conclusion, i think it would be necessary to know the rate of de-registrations in the major European markets.

    Other than the title, it’s a very interesting article as usual, Matt! Thank you!

  9. Hold the horses Matt! 😉
    As to your assumption: “Only taking into account private purchases would make Europe go back to a sales level equivalent to that of 40 years ago” ……., let me add this:

    In case employees would be denied to lease a company car, that doesn’t mean they would not buy one as a privateer!

    1. Hi Rick,
      This is not an assumption, I am saying that if we only look at private sales (half the European market), the total registrations in Europe would be equivalent to a level only seen 40 years ago.
      It is impossible to know how many employees would buy a car as a private buyer if lease didn’t exist, and that’s not the point I’m trying to make in my sentence above. They could also be buying a used car instead for all we know. I happen to disagree with counting car leases as rentals – as I detail in the article.
      What I’m trying to say is that it is now impossible for manufacturers to backtrack and stop selling to rental companies and leasing as otherwise the market would suddenly drop to such proportions that are unmanageable.
      Hope this helps,
      All the best,
      Matt

Leave a Reply

Search