German new-car market downward trend deepens but BEVs grow in May

07 June 2022

new-car registrations

The new-car market in Germany is pursuing a downward trend that continued into May, with petrol, diesel and hybrid cars all seeing a decline.

The situation is not helped by the current automotive industry supply crisis, pushing up the prices of raw materials. This is leading to an increase in vehicle prices, and with the cost of living also rising, consumers are likely delaying the purchase of new cars.

In May, total registrations of new cars in the country amounted to 207,199 units – a drop of 10.2% compared to a year ago, according to the latest figures released by the Kraftfahrt-Bundesamt (KBA). Compared to pre-pandemic 2019, new-car figures were down 33% on a year-on-year basis.

Adjusted for the two extra working days last month, the market fell 18.7% year on year, marking a slight deterioration on the adjusted 17.4% decline in April. Similarly, the seasonally-adjusted annualised rate (SAAR) fell slightly, to below 2.1 million units.

Only battery-electric vehicles (BEVs) saw an increase in new-car registrations. Around 29,000 BEVs were registered, showing an increase of almost 9% year on year. These models are less affected by manufacturer price rises when compared to petrol and diesel vehicles.

In the first five months of 2022, just over one million new cars were registered, corresponding to a decline of 9.3%. Due to ongoing supply-chain issues and geopolitical developments, Autovista24 has adjusted its Germany forecast and predicts that the new-car market will grow by 3.1% this year.

‘The downward trend on the German automobile market is becoming more and more evident in the current year,’ said Reinhard Zirpel, president of the association of international motor vehicle manufacturers (VDIK).

‘The reason for this is the massive global disruption to supply chains. At the same time, order backlogs are reaching a historic record level. This shows that customers want to buy cars, but the industry can only deliver to a limited extent,’ he added.

While new-car registrations were down, production was up following three months of decline. In May, manufacturers produced 306,500 cars, a year-on-year increase of 25%. This was aided by the two additional working days compared to a year ago.

Disruptions and price hikes

Disruptions along the automotive production chain continue to plague the industry. A shortage of materials in German manufacturing has led to companies complaining about bottlenecks, especially when it comes to procuring intermediate products and raw materials.

The German association of the automotive industry (VDA) cautioned that the new-car market was limited by a lack of primary and intermediate products, high raw-material prices, and general uncertainty due to the ongoing war in Ukraine.

The Munich-based Ifo Institute for Economic Research said that current lockdowns in China have made the situation worse for automakers, with the massive disruption to logistics chains slowing down the hopes of a recovery.

At the same time, carmakers are raising prices to offset rising raw-material costs. Long delivery times and tight supply situations pose a challenge, not only for carmakers but also for prospective buyers who have to dig deeper into their pockets when buying a new car.

Price hikes have helped Mercedes-Benz improve profits in the first quarter of the year, with the German premium brand planning to focus on top-end luxury vehicles to increase profitability.

This comes against the backdrop of rising inflation, with consumers not only paying more for cars. Driven by rising energy and food prices, German inflation hit a record 7.9% in May, according to data published by the statistical office Destatis. It is also noteworthy that last month’s inflation rate beat forecasts and rose at an even faster pace than in April.