The growing need for cars in France is generating less and less business for the sector

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Monitoring the car budgets of French families on a solid statistical basis enables us to verify whether or not phenomena on which we have only partial indications are true. The processing of the 2017 'Family Budget' survey, which we are comparing with the 2011 survey, confirms that, except in the Paris region, households are not turning away from cars but are continuing to equip themselves and to 'multi-equip'. However, they are doing so by making increasing use of second-hand vehicles and by ageing their fleets. As a result, the purchase of new cars is reduced to a minimum.

INSEE, like other national statistical offices, periodically examines family budgets by recruiting several thousand households to fill in very complete expenditure diaries. As the survey is very cumbersome and costly, it is only carried out every five or six years and it takes time to process.

Researchers have access to the files and can therefore do their own processing. This is what we did for the survey conducted in 2017, as we did for the 2011 survey. The comparison largely confirms trends that have been identified for years: the number of households is growing as they age, and while this allows for a slight increase in the turnover of the maintenance and repair and used vehicle business, it is not accompanied by an increase in new vehicle sales.

Between 2011 and 2017, the number of households remained more or less constant (at around 29.3 million) but the number of vehicles they declare they own increased by 2.3 million, from 34 to 36.3 million. This means that the number of vehicles per household increased slightly (from 1.16 to 1.23). This growth is fairly evenly distributed between rich and poor households but is, in percentage terms, more than twice as large for households in the first quintile than for households in the fifth quintile.

By housing area, it is notable that the number of households living in the rural world is increasing while the number of households is decreasing, so that the number of vehicles per household is increasing from 1.48 to 1.62. In the peri-urban world, the population is growing by more than 410,000 households and the fleet by almost 1 million. The same applies to medium-sized cities and their agglomerations: the population is growing and the number of vehicles is increasing even more. In the large conurbations, the population is stagnating but the stock is increasing.

Only Paris and the Paris region stand out and could possibly embody the idea of a loss of love for the car: the population is falling slightly and the number of vehicles is rising even more. The number of vehicles per household fell from 0.83 to 0.78. The fall mainly concerns the most affluent households, with those in the first quintile continuing to increase their equipment.

In terms of car expenditure, it is striking to note that, even in current euros, the growth of the fleet is not accompanied by an equivalent growth in car budgets. According to national accounts, car consumption grew by 5% while the fleet grew by almost 7%. By reprocessing the data from the budget survey, we arrive at total household spending on cars, which was 154 billion euros in 2011 and 160 billion in 2017: the increase is less than 4%; spending is falling in constant euros; cars are becoming cheaper. Thus, expenditure per vehicle has fallen from 4,541 euros in 2011 to 4,421.

This essentially corresponds to an ageing of the fleet, which over the six years is 0.5 years (from 9.91 to 10.41 years). It is particularly pronounced in the large conurbations outside Paris and is much stronger for households in the first quintile than for the most well-off households: the stock of modest households has increased from 11.96 years to 12.76; that of households in the fifth quintile has increased from 7.97 years to 8.32. The dispersion increases because the most arbitrable automobile expense is the acquisition expense: as soon as a vehicle is acquired for use and because it is the most reasonable or comfortable way to cover one's mobility needs, the main expenses for use become unavoidable. This is the case for expenditure on insurance, fuel and, essentially, maintenance and repairs.

For these expenses (insurance, fuel, maintenance), when reasoning by vehicle, there are fairly small differences in user expenses from one quintile to another: fuel costs an average of 1,030 euros (950 for the poorest households and 1,068 for the wealthiest); after-sales service costs 1,140 (1,037 vs. 1,241) and insurance 221 (201 vs. 237). In terms of running costs, per car and per year, the most constrained households pay 160 euros less than the average and the richest 300 more. The dispersion is small.

When reasoning by density zones, the differences are more pronounced because of the very different costs of tolls, parking and fines: their annual cost is 158 euros in rural areas and 890 euros in Paris (477 in the major urban areas outside Paris). Thus the use of a vehicle costs 2,550 euros per year in rural areas and 3,325 euros in Paris. It is easy to understand why people are demotorised in one case and not in the other.

When we look at acquisition costs, the picture is quite different. 1.7 billion between 2011 and 2017 (from 61.5 to 60.8 billion). This corresponds to a fall of 330,000 new vehicles sold to households, which more than compensated for the increase in vehicle prices (the average unit values of vehicles purchased rose from 21,310 euros to 26,230).

The increase in the number of new vehicles sold from 5.4 to 5.7 million was accompanied by a slight fall in their average price (from 6,263 to 6,038 euros): in order to continue to equip themselves without allowing their car budgets to drift, French households continued to equip themselves with older and older new vehicles rather than new ones. They are unable to keep up with the rise in prices and, insofar as vehicles have become more reliable, the used car alternative - and older used cars in particular - is reasonable.

So when we look at the most equipped households in the first quintile, those in the rural world, we see that these 1.07 million households are 917,000 equipped and own 1.3 million vehicles. In 2017, they bought around ten thousand new cars for 232 million euros and 250,000 used cars worth 3,740 euros on average for 940 million.

The most affluent households in the same areas (rural areas) number 955,000. 934,000 are equipped and own 1.8 million vehicles. They bought 77,000 new cars for 2.34 billion euros and 167,000 used cars worth 9,653 euros on average for 1.6 billion. Per vehicle, the acquisition expenses of the former are 890 euros per year whereas those of the latter are 2,233 euros: the main part of the 2,000 euros per year that differentiate their budgets per vehicle (3,234 euros for modest households and 5,162 for well-to-do rural households) comes from this, because as much as it is difficult to reduce one's expenditure on use, it is always possible to delay renewal and/or to buy older vehicles.

This is what the French have been doing for years and, while 2017 was a fairly good year for business, the budget survey shows that these trends are becoming more pronounced and explain the difficulty of making a good living in the automotive sales and after-sales professions. Electrification will make vehicles even more expensive and could accentuate these phenomena. However, it can free up "car money" by eliminating the fuel budget and reducing the maintenance and repair budget.

15/11/2021

The weekly column by Bernard Jullien is also on www.autoactu.com.

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