Weak foreign markets slow down passenger vehicle production
New Motor Vehicle Tax and Environmental Bonus Help Bridge the Crisis and Continue to Buoy Domestic Demand
The boost in demand caused by the CO2-based motor vehicle tax and the environmental bonus continue to impact the German passenger vehicle market. At nearly 380,000 units, new vehicle registrations in April 2009 were 19 percent higher than in the same month last year. During the first four months of the year, the German passenger vehicle market has thus grown by slightly more than 18 percent to almost 1.25 million units. Sales have therefore increased by almost 200,000 units, compared to the number of new vehicle registrations recorded during the same period last year. Matthias Wissmann, President of the German Association of the Automotive Industry (VDA), commented: "The consumer-focused sales incentives are quite obviously attaining the government's goal of bridging the crisis and stabilizing the domestic market. Although these measures cannot fully offset the continued weak export market, they do make a major contribution toward safeguarding employment amidst the global economic crisis."
The German automakers' domestic orders continued to rise in April (+3 percent). Incoming orders in Germany have increased by 32 percent during the year to date. The environmental bonus is obviously more effective than expected in attracting people who have not yet bought a new vehicle into the showrooms. Together with the new motor vehicle tax, it is making an effective contribution to boosting private consumption. The German manufacturers' large backlog of orders, which has almost doubled since the beginning of the year to 600,000 passenger cars, will probably continue to buoy new vehicle registrations in the coming months.
In contrast, demand continues to be weak in most foreign markets. In the U.S., for example, sales dropped by 34 percent to 817,000 light vehicles in April, and by 37 percent during the first four months of the year. Although German automakers were also affected by the weak market, they managed to increase their market share by more than one percentage point to 7.3 percent. In the passenger car segment, they even achieved a market share of over 11 percent.
Incoming orders from abroad have continued to remain far below last year's levels, declining by 29 percent in April, and by 31 percent during the first four months of 2009. However, incoming orders have tended not to drop further during the past few months. Exports have substantially decreased during the year to date (-40 percent). A total of 221,000 cars were exported in April (-48 percent), although the drop was due in part to the fact that the month had two fewer working days this year than in 2008. Wissmann emphasized that "We are counting on the incentive programs that many European countries have introduced to at least slow down any further decline. That should improve export conditions for the German brands in particular."
Despite the improvement in domestic business, the development of exports forced German automakers to substantially reduce their production output. A total of 382,000 passenger vehicles were manufactured in Germany in April (-34 percent). During the first four months of 2009, production totaled slightly more than 1.4 million passenger vehicles, a decrease of 31 percent from the same period last year.
