Italy’s new car registrations YoY for December 2025 came in at 0.00%, according to the latest data from the Sigmanomics database. This marks a notable improvement from November’s -0.60% but falls short of the 1.50% consensus forecast. The data covers the entire Italian market and reflects registrations reported up to December 2, 2025.

Drivers this month

• Stabilization in consumer demand after two months of contraction.
• Supply chain normalization easing vehicle availability constraints.
• Lingering inflation pressures and higher financing costs tempering purchases.

Policy pulse

The reading remains below Italy’s pre-pandemic average growth rate of roughly 2.50% YoY, indicating subdued recovery momentum. The European Central Bank’s (ECB) recent rate hikes to combat inflation continue to tighten financial conditions, impacting auto loans and leasing costs.

Market lens

Immediate reaction: The EUR/USD pair dipped 0.15% within the first hour post-release, reflecting cautious investor sentiment. Italian government bond yields rose modestly by 3 basis points, signaling slight risk repricing.

New car registrations serve as a key barometer of consumer confidence, disposable income, and credit availability in Italy. The 0.00% YoY growth contrasts with the 4.10% and 4.20% expansions recorded in October 2025, underscoring a recent slowdown.

Monetary Policy & Financial Conditions

The ECB’s cumulative 175 basis point rate hikes since mid-2024 have increased borrowing costs. Auto loans, which constitute a significant share of vehicle purchases, have become more expensive, dampening demand. The Italian banking sector’s cautious lending stance further constrains credit availability.

Fiscal Policy & Government Budget

Italy’s fiscal policy remains tight amid efforts to reduce public debt, limiting stimulus measures that could boost consumer spending. The government’s incentives for electric vehicle (EV) adoption continue but have yet to fully offset broader demand headwinds.

External Shocks & Geopolitical Risks

Ongoing geopolitical tensions in Eastern Europe and energy market volatility add uncertainty. Higher energy prices indirectly affect consumer budgets, reducing discretionary spending on big-ticket items like cars.

Drivers this month

• Improved vehicle availability following semiconductor supply recovery.
• Moderate easing of inflation expectations supporting consumer confidence.
• Persistently high interest rates limiting credit-driven purchases.

Policy pulse

The ECB’s inflation target of 2% remains elusive, with core inflation in Italy hovering near 3.50%. This keeps monetary policy restrictive, which is reflected in the subdued car registration growth.

Market lens

Immediate reaction: Italian equity indices such as FTMIB showed a mild 0.30% decline, reflecting investor caution. The EUR/JPY currency pair also weakened by 0.20%, indicating risk-off sentiment.

Looking ahead, Italy’s new car registrations face a complex outlook shaped by macroeconomic and structural factors. The following scenarios outline potential trajectories over the next 12 months:

Bullish Scenario (30% probability)

• ECB signals pause or easing in rate hikes by mid-2026, lowering borrowing costs.
• Government expands EV incentives, boosting demand.
• Geopolitical tensions ease, stabilizing energy prices and consumer confidence.
• Result: YoY growth rebounds to 3-4% by Q4 2026.

Base Scenario (50% probability)

• Monetary policy remains restrictive but stable.
• Gradual supply chain normalization continues.
• Fiscal policy remains neutral with modest EV support.
• Result: Flat to 1.50% YoY growth through 2026.

Bearish Scenario (20% probability)

• Further ECB tightening amid persistent inflation.
• Worsening geopolitical risks increase energy costs.
• Consumer credit tightens sharply.
• Result: Renewed contraction, with YoY declines of 1-2%.

Italy’s new car registrations YoY data for December 2025 reflect a market at a crossroads. The zero growth reading signals a halt to recent declines but underscores ongoing challenges from monetary tightening, fiscal restraint, and external shocks. Structural trends such as the shift to electric vehicles and supply chain normalization offer long-term growth potential but will take time to fully materialize.

Investors and policymakers should monitor credit conditions, inflation trajectories, and geopolitical developments closely. The automotive sector remains a bellwether for broader consumer health and economic momentum in Italy.

For market participants, the muted immediate reaction suggests expectations were largely priced in. However, volatility may increase if upcoming ECB decisions or geopolitical events shift the macro landscape.

In summary, Italy’s new car registrations are stabilizing but face a cautious outlook amid persistent headwinds and evolving structural dynamics.