The latest data from the Sigmanomics database shows that France’s new car registrations declined by 0.30% year-on-year in December 2025. This figure contrasts sharply with the 3.60% consensus estimate and the prior month’s 2.90% growth. The reading marks the first contraction since June 2025, when registrations plunged 12.30% YoY amid supply chain disruptions and inflation spikes.

Drivers this month

• Supply chain normalization slowed, with semiconductor shortages persisting.
• Higher financing costs due to ECB rate hikes dampened consumer credit demand.
• Energy price volatility and geopolitical tensions in Eastern Europe increased economic uncertainty.

Policy pulse

The European Central Bank’s continued monetary tightening, with the main refinancing rate at 4.50%, has increased borrowing costs. This environment pressures auto loans and leasing, traditionally key drivers of new car sales in France. Inflation remains above the ECB’s 2% target, limiting policy easing prospects in the near term.

Market lens

Following the release, the EUR/USD currency pair weakened by 0.30%, reflecting concerns over slowing domestic demand. French auto stocks, such as PEUPA, saw a modest 1.20% decline in early trading, signaling investor caution.

New car registrations are a key barometer of consumer confidence and durable goods demand in France. The 0.30% YoY decline contrasts with the 12-month average growth of 0.70% since January 2025, highlighting a recent weakening trend. Historically, registrations fell sharply during the 2023 energy crisis (-15% YoY in Q4 2023) and rebounded in 2024 as supply chains improved.

Macroeconomic context

• GDP growth slowed to 0.20% QoQ in Q3 2025, reflecting weaker domestic demand.
• Unemployment held steady at 7.10%, but wage growth remains subdued.
• Consumer price inflation was 4.10% YoY in November, above the ECB target.

Fiscal policy & government budget

The French government’s fiscal stance remains moderately expansionary, with a 2025 budget deficit forecast at 3.80% of GDP. Targeted subsidies for electric vehicle purchases continue, but broader fiscal support is constrained by EU deficit rules. This limits stimulus potential for the auto sector.

External shocks & geopolitical risks

Ongoing tensions in Eastern Europe and global trade uncertainties have disrupted supply chains and increased input costs. Energy price volatility also weighs on household budgets, reducing discretionary spending on big-ticket items like cars.

Seasonal adjustments and supply chain improvements had supported positive growth since September, but the latest data suggest these factors are losing steam. The chart below illustrates the volatile trajectory of registrations over the past eight months, highlighting the sharp rebound from the mid-year lows and the recent downturn.

Market lens

Immediate reaction: EUR/USD dipped 0.30% post-release, reflecting concerns about slowing domestic demand. French auto stocks, including RENA, fell 1.50%, while the French 10-year bond yield rose 5 basis points, signaling risk-off sentiment.

Looking ahead, the outlook for France’s new car registrations is mixed, with several scenarios possible depending on macroeconomic and policy developments.

Bullish scenario (20% probability)

• Supply chains normalize faster than expected, easing vehicle availability.
• ECB signals pause or cut in rates by mid-2026, lowering financing costs.
• Government expands EV subsidies, boosting demand.

Base scenario (55% probability)

• Gradual improvement in supply chains but persistent cost pressures.
• Monetary policy remains restrictive through 2026, limiting credit growth.
• Moderate fiscal support continues without major stimulus.

Bearish scenario (25% probability)

• Geopolitical shocks worsen, disrupting supply and consumer confidence.
• Inflation remains elevated, forcing further ECB tightening.
• Energy prices spike, reducing household disposable income.

Policy pulse

ECB’s forward guidance will be critical. Any dovish shift could revive auto financing demand. Conversely, persistent hawkishness risks prolonging the downturn.

Market lens

Auto sector ETFs such as DSY may see volatility aligned with policy signals and registration trends. The EUR/USD pair’s sensitivity to French economic data will remain elevated.

France’s new car registrations YoY contraction in December 2025 highlights emerging risks to consumer demand amid tightening financial conditions and external uncertainties. While the sector showed resilience earlier in the year, the latest data suggest caution is warranted. Policymakers face a delicate balance between controlling inflation and supporting growth. Investors should monitor ECB communications, supply chain developments, and geopolitical events closely.

Key Markets Likely to React to New Car Registrations YoY

New car registrations in France serve as a bellwether for consumer confidence and durable goods demand. Markets sensitive to consumer credit conditions, auto manufacturing, and the euro currency will likely react to these data. Key symbols to watch include:

• PEUPA – Major French auto manufacturer, sensitive to domestic sales trends.
• RENA – Renault, a bellwether for French auto sector health.
• DSY – Auto sector ETF tracking European carmakers.
• EURUSD – Euro-dollar currency pair, reacts to French economic data.
• BTCUSD – Bitcoin, as a risk sentiment proxy often moves inversely to economic uncertainty.

FAQs

What does the latest France new car registrations YoY data indicate?

The data shows a 0.30% YoY decline in December 2025, signaling a slowdown in auto demand after months of growth.

How does this affect the French economy?

New car registrations reflect consumer confidence and durable goods spending, so a decline may signal broader economic softness.

What are the key risks for future car sales in France?

Risks include tighter ECB monetary policy, supply chain disruptions, geopolitical tensions, and inflationary pressures.

Takeaway: The December 2025 contraction in France’s new car registrations highlights rising headwinds for the auto sector amid tighter financial conditions and geopolitical uncertainty. Close monitoring of policy shifts and supply chain developments is essential for anticipating the sector’s trajectory.