Significant Downturn In The Car Market

2023 Author: Eric Donovan | [email protected]. Last modified: 2023-08-25 09:36

The German car market fell sharply in 2007. While exports are flourishing, the coming year will only lead to a limited improvement in the home market.

In 2007, the German car market posted its worst result since reunification. With a value between 3.16 and 3.17 million, sales are worse than ever since 1990. The Association of the Automotive Industry (VDA) announced this on Thursday in Frankfurt. The reason for the first minus in four years are the VAT increase on January 1st and the climate debate. For 2008, thanks to new models and rising household incomes, the industry expects a better performance of at least 3.2 million new registrations - but that would be fewer than in previous years. Despite the strong euro, exports achieved their fifth record year in a row in 2007 thanks to strong demand from Eastern Europe.

Boom in the commercial vehicle sector

The most important German industry created 8,000 new jobs this year and has almost 748,300 employees. New jobs were created primarily in the booming commercial vehicle sector and with suppliers.

"We are dealing with a divided market: while exports are buzzing, domestic demand remains weak," said VDA President Matthias Wissmann. Because of the VAT, many consumers in Germany bought a new car at the end of 2006, so that in the first quarter of 2007 around 80,000 cars were missing. The higher tax has made a new car around 700 euros more expensive, but also petrol and diesel as well as repairs and maintenance. In addition, private households are unsettled by the discussion about climate protection and driving bans.

Clarity about road tax is required

The VDA president called for a quick reform of the vehicle tax, the graduation of which is to be switched from cubic capacity to carbon dioxide emissions. "When it comes to clarity about the vehicle tax and the EU requirements, I do believe that we may even achieve 3.3 million new registrations," said Wissman. The EU Commission wants to limit the fleet average of CO2 emissions to 120 grams per kilometer by 2012. Economical cars are already in demand: According to Wissmann, the new cars sold this year consume an average of two percent less than in 2006.

Demand from abroad remains strong. In 2007, exports reached 4.3 million vehicles, the fifth record in a row and compensated for the domestic slump. Manufacturers now build almost as many cars in foreign plants as in Germany: The five million mark was exceeded for the first time abroad, and in Germany, 5.7 million cars, more cars than ever before rolled off the assembly line. Exports to Russia doubled. "Export remains the number one growth engine of our economy," said Wissmann.

Private market collapses

According to the VDA, sales in Germany fell by nine percent in 2007 compared to the previous year. In 2006 the number of new registrations - also thanks to purchases brought forward before the tax increase - grew by 3.8 percent to 3.47 million new registrations. "The Achilles' heel of domestic sales is primarily the private customer business," complained Wissmann. This means that the share of private owners has fallen from 47 to 39 percent within one year.

According to a study, Opel is heading into difficult waters on the German market in the coming year. As the industry institute B&D Forecast reports in a study, Opel will come under tough competitive pressure, while rivals VW and Renault will be among the winners of the development in the German market in 2008. The institute is much more optimistic than the auto industry and, in contrast to the VDA 2008, even expects 3.34 million new vehicles. (dpa)