Sales remain lively in Germany – foreign demand has bottomed out
Passenger Vehicle Business Continues to Stabilize in Germany
Frankfurt am Main, August 4, 2009. The German market for passenger cars continued to stabilize in July. At 340,000 units, new car registrations were almost 30 percent higher in July than in the same month last year. The strong revival of demand thus continued in July, thanks to the scrappage program and the revamped motor vehicle tax. Since the beginning of the year, new vehicle registrations have risen by 27 percent in Germany to 2.4 million units. This represents an increase of more than half a million units, compared to the first seven months of 2008. The German manufacturers did well on the market, with two out of three new cars registered over the past several months being from a German brand.
Domestic orders were once again very lively as well, rising by another 20 percent in July. As a result, German manufacturers posted a 24 percent increase in domestic orders in the first seven months of 2009, compared to the same period last year. The continued high willingness of private households to buy is also reflected in the GfK consumer confidence index, which continued to rise in the summer months as well. The index showed that the willingness to purchase durable goods in particular has increased. "This development and the high order backlog of 487,000 vehicles make us confident about the future and will probably make production capacity utilization more stable in the coming months," said Matthias Wissmann, President of the German Association of the Automotive Industry (VDA).
Thanks to various incentive programs, passenger car demand has also tended to stabilize in key foreign markets over the past few months. The scrappage program is even having a positive effect in Spain, where sales had plummeted by 38 percent in the first half of the year. As a result, new vehicle registrations were down by only 10 percent in July, compared to the same month last year.
The introduction of the scrappage program in the U.S. has also substantially counteracted the downward trend in that market. Light vehicles sales totaled almost one million units in July, representing a drop of just 12 percent from the same month last year. However, the program's format, which is primarily geared toward U.S. manufacturers, prevented the German suppliers from doing as well as the market as a whole for the first time in many months. The scrappage program's unbalanced nature has particularly affected German premium automakers. Whereas total vehicle sales have plummeted in the U.S. by 32 percent since the beginning of the year, sales of cars from German manufacturers on the North American market have declined by only 23 percent. The German suppliers have therefore done much better than the market as a whole. In addition, they managed to keep new registrations of light trucks nearly stable (-4 percent) during this period.
German automakers' exports dropped in July by 12 percent to 289,000 passenger cars. For the first seven months as a whole, the drop totaled 31 percent. Foreign orders, which have dropped by 24 percent since the beginning of the year, were down by only 8 percent in July. When adjusted for seasonal effects, foreign orders were as high in July as in the same month last year. Foreign demand will probably continue to stabilize in the future, because consumer confidence has substantially improved over the past few months in almost all the countries of Western Europe.
Thanks to the continued positive development on the German domestic market and the reviving foreign demand, passenger car production in Germany was almost as high in July as in the same month of the previous year. It marked the first time since fall 2008 that this has been the case. Following a drop of 30 percent in the first quarter and 18 percent in the second quarter, production was down by only 5 percent in July, with 411,000 passenger cars rolling off the production line. Wissmann emphasized that "the market has apparently stabilized at a low level. We will undoubtedly still have to go a long way uphill before we again reach the global sales and production figures we posted in 2007 and 2008."
