The German car market is gaining momentum in the face of easing supply bottlenecks. In March, with a good 281,000 passenger cars, around 17 percent more new cars were handed over to customers than a year ago, as the Federal Motor Transport Authority announced on Wednesday. Passenger car sales had already risen slightly in February. However, the passenger car market has not yet reached the level before the corona crisis in 2019.
The recovery is mainly driven by the thick order backlog that manufacturers have accumulated during the chip shortage and fragile supply chains last year. Experts expect the high to end soon, as new orders fail to materialize due to the weak economy and high inflation.
Initially, however, the large order backlog ensures high capacity utilization at the factories. "Fortunately, the recovery on the new car market is gaining momentum, and after the relatively weak start to the year, a strong spring upswing is now in the offing," explained Peter Fuß, Partner at the management consultancy EY. The shortage of parts, which had led to severe production losses last year, is playing an increasingly minor role. Accordingly, production could be further ramped up.
Short-lived boom
In a few months, however, the declining order intake is likely to slow down the upward trend. Then the competition between manufacturers is likely to increase and discounts will play a greater role again, says Fuß. For the year as a whole, he expects the German new car market to grow by around ten percent.
The importers' association VDIK assumes that the second quarter will also go well for the industry. "In view of weak incoming orders, however, this will not remain so permanently," said association chief Reinhard Zirpel.
Pre-crisis level will probably no longer be reached
There are already the first harbingers of a downturn: According to the VDA, 31 percent fewer orders were registered in Germany in March. In the first three months, it was 35 percent less than in the previous year. Ten percent fewer orders were received from abroad.
Currently, production is still booming. After more vehicles rolled off the production lines in Germany in the first quarter than expected, the German Association of the Automotive Industry raised its forecast by 100,000 vehicles to just under 3.8 million passenger cars. Nevertheless, the pre-crisis level is unlikely to be reached. In 2019, around 4.7 million cars still rolled out of the factories.
According to KBA, almost all German brands recorded growth in new registrations in March. The increase was particularly high at Mercedes-Benz with plus 38 percent and VW with plus 29.5 percent. BMW sold 7.3 percent more of its vehicles. Among the various drive types, pure electric cars grew particularly strongly. Their share of new registrations in March was 15.7 (previous year 14.3) percent. A total of 666,818 new cars hit the roads in the first three months, an increase of 6.5 percent.