German car market could see small gains this year, say experts

Germany’s new car market is expected to turn positive this year despite a current slowdown in demand. Picture: Jens Meyer/AP

Germany’s new car market is expected to turn positive this year despite a current slowdown in demand, but sales will still fall well-below pre-pandemic highs, according to analysts at S&P Global Mobility.

“The market won’t sustain the growth of the first half of the year,” Martin Benecke, senior manager at S&P Global Mobility, told a German magazine.

“But we still expect to reach around 2.8m passenger cars in the current year.” Last year, new car registrations reached 2.7m. They rose 18.1% to 243,277 vehicles in July, driven by a 68.9% surge in battery electric vehicles (BEV), the KBA motor transport authority said.

For the first seven months, new registrations were up 13.6% year-on-year to 1.6 million.

While he expects new registrations to rise to 2.9m next year, Mr Benecke said he doesn’t see the German car market returning to previous highs. In 2019, before the pandemic and the war in Ukraine, Germany recorded 3.6m new car registrations.

“If things go well, it could reach another 3m passenger cars. But no more”, Mr Bennecke said of the German car market’s longer-term potential.

Carmakers are still working through their order books as long-running shortages of critical components such as semiconductors have eased.

But the outlook is clouded by the prospect that supply chain bottlenecks could return amid surging demand for electric vehicles, and that consumers could cut back on spending due to high inflation and slowing global growth.

Earlier this month, a senior manager at Audi said semiconductor shortages that have created bottlenecks for Germany's car industry will take years to resolve despite chipmakers' plans to build factories in the country.

German automakers and electronics producers have been hit hard by manufacturing delays, caused by a global shortfall of chips. Executives and policymakers are re-thinking supply lines and trying to reduce reliance on a handful of Asian and US chip suppliers.

• Bloomberg with additional reporting by Reuters