Highest number of February registrations for ten years
Wissmann: Domestic market benefits from new motor vehicle tax and "scrapping bonus” – exports remain weak
Geneva/Frankfurt am Main, 3 March 2009. The motor vehicle tax reform and the "scrapping bonus" have triggered a marked boost in demand on the German passenger car market. Domestic orders for passenger cars, which had already increased by 16 per cent in the last week of January, accelerated their growth in February with a massive leap of 63 per cent. In February domestic orders for passenger cars grew by 165,000 units to reach 482,000, the largest volume since 2001. Registrations of new passenger cars climbed 21 per cent in February to 278,000 units. "This is the highest level of sales in the month of February for ten years and means that new registrations are now showing positive growth rates again for the first time in over six months. We expect that over the entire first quarter new registrations will be above the previous year's level," stressed Matthias Wissmann, President of the German Association of the Automotive Industry (VDA), at a press conference at the Geneva Motor Show.
The clear jump in orders from within Germany will continue to have a positive effect on the numbers of new registrations in the coming months, according to the VDA president. This boost had already led to some manufacturers either canceling or greatly reducing the short-time working they had previously scheduled. "We have a chance of breaking through the 3-million mark in new passenger car registrations this year, despite the difficult state of affairs," Wissmann said. This means that the new motor vehicle tax and the scrapping bonus will fulfill their "bridging function" in the current year and balance out the extremely weak export business.
Wissmann emphasized that the customers who are now coming into the car dealerships are not replacing their old cars solely with new small cars, but a significant proportion of them are choosing models in the compact and medium segments. "An initial analysis also shows that nearly half of the customers taking their old cars to the scrap yard are choosing a new model with a German badge," he added. Right from the start the VDA had resisted the temptation to call for a solution that would have benefited German manufacturers only and put imported brands at a disadvantage. "Fortunately the French have reacted quickly to the criticism from Brussels and have now at least in part given up on their original protectionism, which would have drastically restricted the flexibility of the French industry," Wissmann underscored. The EU should however fulfill its role as "watchdog" and monitor further developments carefully.
The VDA has explained to the German Government in detail that it is in favor of improving the scrapping bonus. For example, a customer who wants to buy a new car should not be at a disadvantage just because this particular model has to be produced first - which can take several weeks. "For this reason we say the deciding criterion for the application to the Federal Office of Economics and Export Control (BAFA) has to be the date of the sales contract. Of course, to prevent abuse of the system, the bonus will only be paid out once the new car has actually been registered in the same person's name," Wissmann stressed.
The rules for cars that are up to a year old also had to be adjusted, Wissmann continued. This "second pillar" of the scrapping bonus was of decisive importance to the German premium brands. Among the assembly plant workers in particular - which is naturally a domain of German manufacturers - as a rule their new cars have to be driven for one year before they can be sold to anyone else, Wissmann said, adding, "But this means that at present they are not covered by the regulation, although this category is explicitly listed in the law governing the bonus. This does not make any sense. The inclusion of one-year-old cars that was explicitly provided for must not remain an empty promise. We urge the policy-makers to rapidly improve the situation - which is also in the interests of safeguarding jobs at our companies in Germany - and thus puts to rest the concerns of many angry motorists."
"Despite the welcome February figures for the domestic market, we are still a long way from sustained recovery on the global markets," Wissmann underlined, adding that the dramatic situation was characterized by the fact that all the important automotive markets were affected by the worldwide crisis virtually simultaneously. In the first two months of the current year the situation on the world's markets had become even worse. The slump had probably not yet bottomed out, and recovery could not be expected in the coming months, the VDA president said.
After six years in succession with record figures, in 2008 the German manufacturers saw the total volume of their exports fall by 4 per cent to 4.13 million passenger cars, while worldwide auto sales dropped by 5 per cent. Wissmann: "The continuing strength of German brands is revealed by the fact that they were able to push up their market shares on strategically important markets even under the most difficult conditions." For example, last year the German manufacturers gained 0.7 percentage points in Western Europe, while managing to chalk up a gain of 1 percentage point on the severely beleaguered US market, and a rise of 1.5 percentage points in Russia. The German brands also slightly increased their market share in China. Wissmann said, "This development continued at the beginning of this year. On the important export markets our manufacturers were able to continue expanding their market share. In the USA we also produced better results in February than the market as a whole, which slumped by 41 per cent, and expanded our market share again."
German manufacturers' February exports fell by 51 per cent, to 202,000 units. Passenger car production, which had already come down by 34 per cent in January, was reduced by another 47 per cent. Many firms were using short-time working. Yet despite the crisis Wissmann remains optimistic: "The German manufacturers will use innovative products to create the foundation for emerging from the crisis in a stronger position than our competitors. The premieres unveiled at the Geneva Motor Show lend impressive support to this strategy."
They include alternative powertrains and the electrification of the automobile. However, Wissmann said, enjoying the anticipation of new powertrain technologies should not cloud one's view of reality: "Over the next ten years the internal combustion engine will continue to prevail, and it still has a lot of potential for optimization in the areas of reducing consumption and transmission technology." He went on to say that today German brands already have nearly 90 models on offer that consume less than 5 liters of fuel over 100 km. The great progress the companies are making in reducing CO2 emissions is clearly illustrated by the following figures: in 2007 the average CO2 value of all newly registered passenger cars in Germany fell by 1.7 per cent, and yet last year overall CO2 values were reduced by another 2.9 per cent. In fact the German manufacturers brought down their CO2 output by 3.1 per cent, which was more than the importers achieved. The smallest savings were made by the French (down by 0.8 per cent) and the Japanese (down by 2.1 per cent). In January 2009 the average CO2 output of newly registered vehicles in Germany was 159.5 g CO2/km (down by 4.7 per cent), i.e. below 160 g CO2/km for the first time. "One sixth of newly registered passenger cars now meets the strict Euro 5/6 standards. The range of models available will continue to expand. So it would be completely the wrong decision to postpone buying a car until electric vehicles come onto the market at competitive prices," Wissmann emphasized.
Turning to the outlook on the automotive markets, Wissmann said: "If the economic stimulus packages that have already been set in motion in many countries, and the numerous state measures now being taken to encourage demand for automobiles, elicit the intended effects - as can be observed right now on the German market - in the second half of this year we could be seeing a gradual initial recovery in global sales." However, this would require the stabilization of the financial, credit and capital markets.
The VDA President stressed: "Even if the crisis elicits louder calls for protectionism, I can only give an urgent warning against a race to wall off national markets, because that would be sure to delay economic recovery." He said it was to be welcomed that the US Government had decided not to discriminate against non-American products, and added that the German automotive industry was working consistently toward improving the overall international conditions and reducing trade barriers, irrespective of whether this was done through the WTO or by means of free trade agreements. All those involved had to come out in support of free trade.
At the Geneva Motor Show Wissmann also emphasized that "The preparations for the 63rd IAA Cars, which will be held in Frankfurt am Main in September 2009, are running at top speed." All the major automotive manufacturers would be there again, he said, and for the first time BMW would be presenting its products on a larger area in the new Hall 11. The manufacturers Bitter, Lotus, Tesla and Think will be at the IAA for the first time. Nearly all the major suppliers have registered for the IAA. Wissmann said that the IAA slogan - "A Moving Experience" - backs up the aim of the world's most important trade fair for mobility: "Visitors to the IAA will be able to experience the things ensuring sustainable mobility today. And at the same time they will also see what is moving our automotive future."