Europe’s car market picks up slightly in May
On the radar
- Hungarian central bank kept policy rate unchanged at 6.5% on Tuesday.
- Today, Czechia’s central bank holds a rate setting decision and stability of rates is expected.
- In Poland, real retail sales increased 4.3% y/y in May mostly in line with expectations.
- Today, at 10 AM CET, Poland will publish unemployment rate in May, while Serbia will release wage growth in April at noon CET.
Economic developments
Europe’s car market picked up slightly in May, as robust demand for electric and hybrid vehicles helped offset the drag from global trade tensions. According to ACEA, new-car registrations in Europe rose 1.9% y/y in May. However, since the beginning of the year, new EU car registrations fell by 0.6% in Europe. In the region, car registrations declined since the beginning of the year in Romania and in Slovakia only. In Slovakia, such development is driven to some extent by the changes in the VAT tax introduced in January. However, new car registrations in Slovakia during May rose by almost 5%, while in Romania decline was quite substantial. Other CEE countries experience growth in car registrations throughout 2025 that we see as a positive signal regarding economic outlook.
Market movements
The Hungarian central bank kept the policy rate unchanged at 6.50%. The decision met both our expectations and the market consensus. The forward guidance remained unchanged compared to May as well, but new growth and inflation projections were published. Hungarian central bank revised down 2025 growth to 0.8% meeting our most recent forecast. In the following year, Hungarian economy should accelerate, however. Inflation is likely to stay elevated with average inflation forecast at 4.7% in 2025. Today, Czech central bank holds a rate setting decision and we expect stability of rates. Recent comments from central bankers suggest growing cautiousness and Czechia is getting close to its terminal rate in our view. As for global developments, oil price ticked up on Tuesday, while Federal Reserve Chair Jerome Powell reiterated his view that policymakers need not rush to adjust policy. The long-term yields have been declining across the region this week while CEE currencies strengthened against the euro on Tuesday.
Author
Erste Bank Research Team
Erste Bank
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