German market to see small gain in 2023, S&P Global says

German market to see small gain in 2023, S&P Global says

Automotive News Europe — 2023-08-21

Automotive Industry

Despite the current decline in demand, the German new-car market is likely to turn positive this year, according to analysts at S&P Global Mobility.

"The market is not sustaining the growth of the first half of the year, but we expect it to reach around 2.8 million passenger cars in the current year," said Martin Benecke, a senior manager at S&P Global Mobility, formerly IHS Automotive.

In 2022, German registrations reached 2.7 million.

Benecke expects the German market to increase slightly to 2.9 million passenger cars in 2024.

In the long term, the market will not reach its pre-pandemic height of 3.6 million reached in 2019. "If things go well, it can reach another 3 million passenger cars. But no more," Benecke said.

German registrations rose 18% to 243,277 in July 2023, boosted by a 69% jump in sales of full-electric cars.

Registrations were up 14% to 1.64 million in the first seven months as automakers cleared a backlog created by supply shortages and lower demand during the pandemic.

"The industry had a huge inventory, but it was processed very quickly," Benecke said.

He expects the market to cool down significantly by the end of 2023 as customers cut back on spending due to high inflation and slowing global growth.

Automakers urgently need orders again but face challenges attracting buyers into showrooms as smaller, lower priced cars are axed because the technology needed to make the vehicles meet emissions regulations makes them unprofitable.

Benecke said cars in the affordable segments have almost completely disappeared.

For example, previously consumers could buy a Ford Fiesta for €12,000 ($13,000)  but the car is no longer being built.

The problem will become worse as automakers electrify their fleets, concentrating on larger, higher margin cars.