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Customer LoginsGerman passenger car sales fall 5.4% y/y in October on fewer selling days
Germany experienced a reverse in passenger car sales of 5.4% year on year (y/y) in October, but only because of calendar effects, and market fundamentals remain robust.
IHS Markit Perspective
- Significance: German passenger car sales fell by 5.4% year on year (y/y) to 262,274 units in October, as a result of fewer working days during the month, according to the latest set of sales data released by the KBA.
- Implications: Two fewer selling days were responsible for the decline after consecutive months of robust gains for the German market off the back of good private sales and strong business and consumer confidence in general generated by positive macro data.
- Outlook: The German market is still on target for a positive result for the full-year in 2016 as we enter the last two sales months of the year. despite uncertainties caused by Brexit and the forthcoming US election the German economy remains strong and a steady stream of attractive new models and robust confidence continue to fuel sales with a full year uplift of 4.7% y/y forecast.
The German passenger market recorded its first fall in a number of months in October, with 5.4% year-on-year (y/y) decline to 262,274 units as a result of two fewer working days during the month, according to the latest set of data from the Federal Motor Transport Authority (Kraftfahrt-Bundesamt: KBA). This contributed to a slight decline in the year-to-date (YTD) sales improvement, which stood at a 4.9% y/y increase to 2,818,507 units. One interesting development that could be seen in October's sales was the comparative lack of effect the recently introduced subsidies for electric vehicles (EVs) and plug-in hybrid EVs (PHEVs) had on the German market. In total, there were 1,449 PHEVs and 1,167 pure EVs registered in October, but these numbers were highly disappointing given the EUR4,000 subsidy on pure EVs and EUR3,000 on PHEVs that are now available to German buyers. The KBA recorded a combined total of 5,000 hybrid vehicle registrations during October.
In terms of sales by brand, the perennially market-leading Volkswagen (VW) brand posted a very poor month of sales irrespective of the marked calendar effect during the month, with a 19.6% y/y decline to 49,441 units, which in turn brought YTD sales down further by 3% y/y for the first 10 months of the year to 559,444 units. The slowdown came after a big drop in Golf sales during September which continued into October. This was most likely down to the imminent arrival of the new Mark 8 Golf, which is due to make its public debut this month and which will go on sale next year. Despite how it may be presented, the Mark 8 Golf will be more an extensive refresh four years after the launch of the all-new Mark 7 on the MQB platform, much in the same vein as the shift from the Mark 5 to the Mark 6 was at the end of 2008. Other key models such as the Polo are also ageing and hindering VW's sales momentum in its home market.
Mercedes-Benz occupied is customary second-placed position in the market and also managed to healthily outperform the overall market, with a 2.4% y/y decline to 24,907 units. The GLC-Class and the new E-Class have consistently driven sales growth in recent months, with the new E-Class having been launched earlier the year. The company is also enjoying strong sport utility vehicle (SUV) and crossover utility vehicle (CUV) sales. In the YTD, sales grew by 8.8% y/y, helped in particular by the aforementioned models, with sales rising to 260,735 units. This helped keep Mercedes-Benz to second place in the YTD standings, ahead of its two main rivals Audi and BMW. It was in that order that the two brands ended up in terms of the October sales positions, with again both companies outperforming the overall market and showing the overall strength of the volume premium brands in the German market. Audi's sales dipped by just 2.9% y/y to 23,292 units, with the company having launched the much-anticipated Q2 in Germany, while the new A4 has also proved a popular addition to the Audi range. In the YTD, Audi sales rose by 8.7% y/y to 250,976 units. BMW recorded sales of 20,608 units in October, which was a 3.5% y/y decline, while YTD sales rose by 5.8% y/y to 217,192 units.
Outlook and implications
The German passenger car market remains on a strong track for a positive result in 2016 despite October's negative result, which was driven by negative calendar effects. The market remains in an upbeat mood given the ongoing strong macro-indicators and the strong business and consumer confidence that has been the result of those indicators. Private sales have been robust in recent months and have been further helped by a raft of attractive new model launches in all segments, which have driven advanced orders and drawn buyers into showrooms for models such as the VW Tiguan, the Mercedes-Benz E-Class, and most recently the aforementioned Audi Q2. In 2017, the Mark 8 Golf, the next iteration of the model, which is Germany's perennially best-selling model, should provide further sales momentum.
On a macro basis, despite the ongoing tensions relating to the United Kingdom's Brexit vote, the upcoming US presidential election, and the refugee burden, the German economy has done well since late 2014, overcoming a mid-2014 growth pause to grow at a solid annualised pace of roughly 1.5%, broadly matching its long-run potential. This has been the case despite net exports having essentially ceased to contribute to GDP growth since 2013. The purchasing managers' index (PMI) and Ifo leading indicators experienced setbacks around the turn of the year 2015/16 and again in July−August 2016 after the Brexit vote, but they have since rebounded quite convincingly to levels indicative of healthy economic expansion. However, the global growth outlook remains somewhat mixed, as strengthening tendencies in the United States and Europe are offset by recessions in major emerging economies such as Russia and Brazil. The downturn in those countries has attenuated lately, though, and the Chinese growth slowdown appears to have stopped. Our October forecast predicts Germany's GDP growth, following 1.5% (calendar adjusted) in 2015, will be 1.8% in 2016 and 1.7% in 2017. These forecasts had been somewhat higher at 1.9% and 2.0%, respectively, in our June round ahead of the Brexit decision. For full-year 2016, IHS Automotive forecasts that sales will hit 3.36 million units, an increase of 4.7% y/y and in line with the current running rate.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.