German Automotive Industry Impacted by the Global Recession
German automakers are adjusting production output to the extremely weak demand on the world's automobile markets. Whereas domestic automobile production in the first half of the year was 2 percent higher than in the record year of 2007, output dropped dramatically in the second half of 2008. At 275,000 units, vehicle production in December was 22 percent lower than in the same month of 2007. As a result, production for full-year 2008 dropped for the first time since 2002, declining by 3 percent to over 5.5 million units.
Exports by German manufacturers have been severely impacted by the global decline in car sales in the second half of the year. Plummeting sales on foreign markets continued in December, which is why exports of passenger vehicles dropped by 22 percent to 223,000 units. For the year as a whole, export volume thus decreased by 4 percent to 4.13 million units. After six consecutive years of record sales and despite further increases in market share on all important foreign markets (Western Europe: +0.7 percentage points, China: +0.1 percentage point, Russia: +1.5 percentage points), the German automakers were not able to buck the general downward trend.
The effects of the real estate and financial crisis and the marked reticence of banks to provide consumer loans have caused insecurity particularly among customers in North America and led to considerable reluctance to purchase new vehicles. Compared to the 2007 results, sales of light vehicles in the United States were therefore down by 18 percent in 2008, to just under 13.2 million units. German suppliers still did comparatively well (-6 percent) in this extremely weak market and were able to increase their market share by one percentage point to almost 7 percent. Nonetheless, they also sold 58,000 fewer units in the U.S. than in the previous year.
As expected, the German market was sluggish in 2008. For the year as a whole, sales on the German market totaled 3.09 million passenger cars, a decrease of 1.9 percent compared to 2007. German automakers (-1 percent) outperformed importers (-3 percent) in 2008 and achieved a slight increase in their market share, to 70 percent (2007: 69.6 percent). Registrations of new passenger cars totaled 226,000 units in Germany in December, or 7 percent fewer than in the same month of 2007. That the decrease was comparatively moderate is due in part to the fact that December had two more working days in 2008 than in the previous year.
The steep decline in incoming orders from Germany and abroad that was recorded in recent months continued in December. While orders from abroad remained at a low level and were down by 32 percent from the previous year, domestic orders were 21 percent lower than in December 2007. As a result, orders for the fourth quarter of 2008 were down by 20 percent. The order backlog has correspondingly continued to decrease, and in December it reached its lowest level since the late 1980s. This development suggests we may see new vehicle registrations at a very low level at the beginning of 2009. Given this troubling situation, the government will be required, more than ever before, to create clear framework conditions that will help stabilize consumer confidence and thereby once again boost people's willingness to buy new products.