No sooner had the festive period passed and the celebration of record breaking registration levels in 2015 subsided, when the frantic new and used car trading antics of January got under way. Unfortunately almost immediately thereafter reports on the state of the global economy started to show a potential cloud or two on the horizon. Whilst it is clear that the automotive industry in the UK has performed ahead of expectations in recent years and our economy holds greater strength than anticipated, events in other parts of the world may yet have an impact on the Eurozone and that will affect how businesses in the UK and Europe seek to achieve their growth aspirations and sales targets over the course of 2016.

From a motor trade perspective the European new car market recorded an overall increase of 9.3% in 2015, taking the number of sales to 13,713,526 units including the UK figures. It is worth noting that this represents a market that, as a whole, has shown improvement for 28 consecutive months albeit at times, on a country by country basis, this performance has been erratic to say the least. The chart below shows the percentage increase by region.

The chart picture runs left to right in overall market volume size and one must consider that, whilst the percentage increases look most impressive for a few countries, this comes on the backdrop of some heavily depressed markets as a result of the recession in 2008.

Interestingly, it is the economic performance of the likes of China, Japan and the USA that is exacerbating concerns of a lower level of economic performance in the Eurozone. The volatility in the Chinese stock market in recent weeks, including significant support from the government for selected stocks, seems to have contributed to greater speculation of impending Chinese recession, although thus far this has not materialised. However, investors worldwide acknowledge that when China sneezes the rest of the world tends to catch a cold. This is probably part of the reason that the Eurozone Sentix indicator, which reports on European-wide market opinion on current economic expectations, has started to fall with a drop of 9.6 points in January and now sits at the lowest level it has done for a year. Whilst this is contrary to some other surveys, it is representative of current sentiment and should not be ignored.

In the USA, the recent decision to increase interest rates and look to end quantitative easing has caused a slowdown in recovery for many sectors. Indeed it was hoped that consumer spending over the festive period and New Year would help support the weakening industrial sector but it would seem the retail buyer was uncomfortable about spending their hard earned money despite the low unemployment figures and supposed job security. Russia and Brazil also look set to face at least another year of recession too.

Looking closer to home, there have been some further rumblings around emissions, with focus drifting slightly from Volkswagen to the PSA group and Renault. At the time of writing, PSA seemed to have been cleared of any wrongdoing but Renault appear to be hanging in limbo for the moment. It would be disappointing if irregularities with any of their diesel powered vehicles were found, as Renault were one of the very first manufacturers to claim they were absolutely in line with legal requirements following VWgate in September 2015. It may also raise cause for concern for those manufacturers that share engines with Renault.

Another changing factor is the world price of a barrel of oil which, as predicted by Glass's some time ago, has continued to drop and not rallied to the $75 per barrel level many had expected by now. Whilst this causes specific issues for certain countries as revenue and profits are now so low, it has also meant that the price of fuel at the pumps round the world has been dropping. In the UK, an aggressive price war triggered by the major supermarkets has accelerated the drop in price, pleasing consumers nationwide and helping improve disposable income levels.

This downward shift in oil prices may, in part, explain the marginally lower than expected demand for alternative fuel vehicles, as some retail buyers have been drawn back to traditional fuels. Indeed, there are reports from the UK trade that larger-engined and less economical cars are becoming marginally easier to sell at the moment which, whilst welcomed by some, is probably not the direction required to support a cleaner environment. Equally, the investment the manufacturers have put into more environmentally friendly technology is looking less rewarding than it should be.

In conclusion, it is clear that 2016 may not be as straightforward as many had anticipated and certainly raises the importance of being able to review all market conditions in a clear and simple manner. Whilst the outlook for the year's trading as whole is unlikely to be adversely impacted in the UK, there is little doubt that some of the tensions of the greater world stage will begin to gnaw at parts of the European and UK economy. Therefore it is likely that the new and used car markets will not only change shape but perhaps some of the key drivers will also alter, although Glass's will continue to provide impartial and valuable data to guide customers to a successful year end.