German new-car market sees upswing with BEVs pushing ahead

10 July 2023

The German new-car market continued its recovery in June, with the country recording 280,139 new-vehicle registrations. This year-on-year increase of nearly 25% was driven in part by battery-electric vehicles (BEVs), which saw 52,988 registrations in the month.

Representing a market share of nearly 19%, BEV registrations increased by a staggering 64% year on year. This means all-electric vehicles developed more dynamically than the overall car market, a trend which was replicated over the first half of the year. In the first six months of 2023, BEV registrations jumped 32% year on year, while the overall market grew more slowly at 13%.

This momentum is set to continue as BEV adoption is projected to grow strongly in 2023 and beyond. ‘We forecast that BEVs will account for 20% of the German new-car market in 2023 and expect this to rise to exceed 50% in 2028,’ said Neil King, forecasting lead at (part of Autovista Group).

Data from the Federal Office for Motor Vehicles (KBA) also revealed that plug-in hybrids (PHEVs) slumped again in June, with 15,930 registrations equating to a year-on-year decline of 39%. This is mainly due to PHEV incentives ending at the start of this year.

The volume of new petrol cars rose 20% last month, with this drivetrain reaching a market share of 36%. Diesel-powered cars saw registrations inch up 10%, equating to a market share of 17%. It is also noteworthy that June benefitted from one more working day compared to a year ago, meaning the adjusted year-on-year growth rate was 19.1% according to Meanwhile, the seasonally-adjusted annualised rate (SAAR) held firm at 2.8 million units.

Robust recovery?

‘The German passenger car market has recovered noticeably in the first half of the year. New-car registrations have developed positively, as expected, and are mainly supported by the slow reduction of the order backlog,’ said Reinhard Zirpel, president of the Association of International Motor Vehicle Manufacturers (VDIK).

‘For the passenger car market as a whole, however, it remains to be said that despite the recovery we are a long way from the market volumes of the pre-crisis period. In the first half of the year, new-car registrations remained 16% below the average of the 10 years before the start of the COVID-19 crisis.’

The German new-car market saw around 1.4 million new passenger vehicles hitting the road in the first six months of 2023. This figure is down 24% compared to the same period in 2019.

The German Federation for Motor Trades and Repairs (ZDK) said that the strong registration figures for June are deceptive. ZDK vice president Thomas Peckruhn commented that the automotive industry has seen a decline in incoming orders since the start of the year.

Domestic orders fell 20% in June compared to a year ago, while in the first six months of the year, manufacturers recorded an even steeper drop of 27%. ‘We assume that this trend will have a negative impact on registration figures in the fourth quarter at the latest,’ said Peckruhn.

For 2023, the VDIK remains optimistic and expects around 2.75 million new passenger car registrations. In 2022, 2.65 million new cars were registered.

Uncertainty remains

Meanwhile, production levels ramped up again for the fourteenth month in a row. In June, 389,900 passenger cars rolled off the production lines in Germany, an increase of 31% year-on-year. In the first half of 2023, a total of 2.2 million passenger cars were produced, corresponding to an increase of 32%. Compared to pre-pandemic 2019, this figure is still down 10%, according to the German Association of the Automotive Industry (VDA).

‘Car production in Germany increased significantly in the first half of the year. The reason for this is primarily the efforts to ease tensions in the supply chains,’ said VDA president Hildegard Müller.

‘Looking at the overall economic situation and the development of new orders, it is to be expected that the high growth rates will weaken soon. The high order backlog will be slowly reduced in the process but is still well above the long-term average,’ she added.

German carmaker Volkswagen (VW) ran into some trouble last month, after reportedly seeing weaker demand for its BEVs and cutting production of some of ID. models in June at its German Emden site. But with the market launch of the VW ID.7, the company is expecting demand to increase again, meaning production can be ramped up.

At the same time, a business survey carried out by ifo Institute showed that expectations among automotive manufacturers hit a low in June. The institute highlighted that the last time expectations were this low was during the financial crisis of 2008. This is another sign that carmakers are experiencing great uncertainty regarding the overall economic situation.

The inflation rate in the country is expected to have reached 6.4% in June, up from 6.1% in May, according to the Federal Statistical Office (Destatis). The ifo Institute expects carmakers to raise prices again, which will mainly affect the premium segment and electric vehicles. German automobile club ADAC has found that new-car prices are growing faster than inflation, calling on manufacturers to moderate their pricing policies.