First signs that export and production are "bottoming out”
German Market Continues to Grow Rapidly in May
Frankfurt am Main, June 3, 2009. The environmental bonus and the restructuring of the motor vehicle tax continued to have a strong effect on the domestic market in May. New car registrations totaled 384,600 units in Germany, an increase of 40 percent compared to May 2008. This was the highest figure for May since 1991, when the economy was booming in the wake of German reunification. The number of vehicle registrations has risen 23 percent since the beginning of the year, to more than 1.6 million units. Matthias Wissmann, President of the German Association of the Automotive Industry (VDA) said: "This proves that the motor vehicle tax and environmental bonus are serving their purpose of increasing domestic demand for passenger cars and in turn stabilizing the German automotive industry and its jobs. And this is happening against the backdrop of the global financial and economic crisis, which has been the primary reason for the drop in exports." The German automakers are holding their own on the domestic market and were able to record significant increases in May, with their market share rebounding to 66 percent. This market share is 5 percentage points higher than in March.
The German automakers' domestic orders were up 14 percent in May, a 29-percent increase from the results for the first five months of 2008. The dynamic demand has normalized somewhat, which was to be expected due to an extension of the environmental bonus until the end of the year. The large order backlog of 568,000 vehicles should serve to stabilize utilization of production facilities during the coming months.
Demand for passenger cars on the foreign markets continued to be weak in May, although there are increasing signs that this trend is bottoming out, partly as a result of the numerous incentive programs. After double-digit growth in May, new car registrations in France are now almost at the same levels as last year. In China, the most important foreign market for German automakers, current forecasts are pointing to significant market growth for this year. Sales in the United States have stabilized at a low level since March, but sales in May were down 34 percent and light vehicle registrations decreased by 36 percent in the first five months of 2009. Due to the uncertain future of the U.S. automotive industry, there is continuing reluctance on the part of American consumers to buy new cars. Given these difficult conditions, German automakers' vehicle sales were down 24 percent on the U.S. market in May. The German companies still managed to outperform the market as a whole, however, even slightly increasing sales of light trucks for the third month in a row. German automakers' exports of passenger cars dropped 24 percent in May, to 246,000 units. The total decrease for the first five months as a whole was 38 percent.
Foreign orders, which have fallen 28 percent since the beginning of the year, were only down 17 percent in May, an increase of 10 percent compared to April when adjusted for seasonal effects. Foreign demand could continue to stabilize in the coming months due to a slight improvement in customer confidence.
The positive development on the German market in May could only make up for the weak export numbers to a limited extent. Although production remained 9 percent lower than in the same period last year, when adjusted for seasonal effects it increased by 19 percent from April. Based on these indicators, it appears that the market is bottoming out. More than 1.8 million passenger cars rolled off production lines since the beginning of the year, a 28-percent decrease from the same period in 2008.
