IHS Global Insight Perspective | |
Significance | The German passenger car market continued its recent positive trajectory during February as sales growth closely matched January's increase of 16.5%, with volumes rising by 15.2% year-on-year to 224,426 units. |
Implications | As there was little in the way of a calendar effect on February's sales, the uplift in volumes is a positive sign of a genuine recovery in organic sales demand in the market. However, it should also be highlighted that the February sales total was almost 50,000 units down on February 2009's tally, which was the first monthly sales total to be influenced by the successful German scrappage scheme. |
Outlook | After two years of massive volatility in the German passenger car market due to the downturn and the government's subsequent response with the highly successful scrappage scheme, stable growth appears to be returning to the market, bolstered by the extremely robust state of the recovery in the wider German economy. |
The February data for the German passenger car market released by the German Federal Motor Transport Authority (KBA) show an increase in the passenger car market during the month of 15.2% year-on-year (y/y) to 224,426 units. The market continued the momentum that was generated during January, when sales grew 16.5% y/y. This offers evidence that the market is returning to some kind of stability following the massive volatility that was witnessed in 2009 and 2010 as a result of the introduction of the scrappage scheme, which led to a 26.4% increase in the market during 2009. The subsequent exhaustion of the EUR5 billion (USD6.9 billion) of funding for the scheme in September 2009 led to an almost exactly equivalent decline in the market during 2010. For the rest of 2011 IHS Automotive forecasts that stable growth will remain a feature of the market, although it is likely to slow towards the end of the year as the base of comparison stabilises. It should be noted that the rises recorded in January and February were up against the lower volumes recorded in the equivalent months of 2010, which suffered from particularly weak market activity in the immediate period following the exhaustion of scrappage funding.
German Passenger Car Registrations | ||||
Manufacturer | Feb 2011 | % Change | YTD 2011 | % Change |
VW | 48,897 | 5.8 | 100,083 | 13.1 |
BMW, Mini | 18,879 | 20.8 | 37,166 | 25.8 |
Opel | 17,917 | 17.8 | 32,950 | 18.6 |
Mercedes-Benz | 17,906 | 11.1 | 34,807 | 14.3 |
Audi | 17,121 | 16.4 | 31,429 | 14.1 |
Ford | 15,939 | 10.4 | 31,094 | 15.6 |
Renault, Dacia | 13,444 | 39.7 | 25,849 | 20.8 |
Skoda | 10,216 | 2.9 | 18,565 | 4.1 |
Hyundai | 7,627 | 36.5 | 12,578 | 36.7 |
Toyota, Lexus | 6,404 | 38.0 | 12,163 | 35.6 |
On a brand-by-brand basis, the Volkswagen (VW) passenger car brand actually underperformed the market significantly during February, posting a 5.8% y/y rise in sales to 48,897 units, significantly below the 15.2% y/y rise in volumes recorded by the rest of the market. On a year-to-date (YTD) basis, the VW brand's sales rose by 13.1% y/y, which meant that the brand's overall market share in the first two months of the year declined marginally as a result of the overall market increase of 15.8% y/y during the period. The brand will receive something of a boost moving into the second quarter as a result of the launch of the niche Golf Cabriolet, while the new Passat is currently being delivered to German customers. However, the sales momentum of VW's best-selling Golf is slowing marginally as the sixth-generation model enters its third model year. BMW/Mini was the second best-selling passenger car brand in February, enjoying the strongest increase of any top-five car brand in the market, with a 20.8% y/y rise in sales to 18,879 units. However, this strong uplift is likely to have been influenced somewhat by customers deferring purchases of the 5-Series range in February last year ahead of the launch of the new F10 model in March 2010. Opel was in third place on the list of brands with sales of 17,917 units sold last month, with the company benefiting from the rollout of the sports-tourer versions of the Astra model. Renault Dacia enjoyed the strongest volume growth of all the top-10 passenger car brands, with the seventh-placed brand enjoying a rise of 39.7% y/y to 13,444 units. The Duster sport utility vehicle (SUV) continued to sell strongly and the brand also benefited from a lag in sales experienced during the early months of last year following the exhaustion of the scrappage scheme, from which low-cost brands such as Dacia benefited hugely. Hyundai, in ninth place, also enjoyed a strong sales uplift in February of 36.5% y/y to 7,627 units. It will be interesting to see how the new i40, which was launched at this week's Geneva Motor Show, fares in the ultra-competitive German D1-segment market. The model has been developed at Hyundai's European research and development centre in Rüsselsheim and has had its chassis tuned and styling modified from the United States market version specifically for the European market.
Outlook and Implications
The German market continued its return to stable conditions in February following the rollercoaster ride of the last two years. Although the outright increase of 15.2% y/y last month was evidence that the conditions exist in Germany to provide stable organic growth in the country's passenger car market for the duration of 2011, it should also be noted that February 2011's outright sales volumes were around 50,000 units less than the figure recorded in 2009, which was when the German government's EUR5-billion scrappage scheme was introduced. A more accurate comparison of February's sales is perhaps with the sales volumes in the equivalent month of 2008, which occurred before the global financial downturn. During February 2008 the German passenger car market tallied 229,000 units, which indicates that the market is now returning to pre-crisis conditions (see Germany: 5 March 2008: German New Car Registrations Post 25% Increase in February).This recovery towards organic growth in Germany continues to be underpinned by the strong macroeconomic growth that the country is enjoying as a result of increased consumer and business confidence and healthy export order books in the heavy industrial sector, of which the country's indigenous carmakers are an integral part. Despite Germany being a vital part of the rescue package for economies affected by the Eurozone sovereign debt crisis in 2010, the fallout from this has had surprisingly little negative effect on German economic growth momentum, with the economy set to outshine its European peers moving into 2011. According to the latest estimate by IHS Global Insight, the German economy achieved 3.5% GDP growth in 2010, from contraction of 4.7% in 2009, and this is forecast to be followed by another strong performance of growth of 2.7% (2.6% without calendar adjustments) in 2011. Domestic demand is set to increasingly take over from exports as the driving force as the economic recovery continues apace, which will feed back positively into the passenger car market. As a result, IHS Automotive is maintaining its current forecast and remains optimistic about the growth prospects for the German passenger car market. We currently see 2011 sales at close to 3.1 million units, a 7.6% y/y increase on 2010's volumes.