Return Of The Wirtschaftswunder: German Car Sales Up 21 Percent
No, you are not hallucinating. Germany’s February car sales are out. Bottles of champagne will soon follow. Unbelievably, German cars sales rose in February by 21 percent. This is what the Verband der Automobilindustrie (VDA) told Automobilwoche [sub]. 278.000 units were moved. “These are the highest February sales numbers in the last ten years, ” VDA-President Matthias Wissmann said at the Geneva auto show. “For the first time in six months, registrations are growing. We expect that domestic sales of the complete first quarter will be above prior year numbers,” Wissmann said. It’s getting even better, much better:
A lot of German cars are made to order. In the last week of January, orders jumped 16 percent. In February, orders skyrocketed a mind-numbing 63 percent.
What caused the run on the showrooms? According to the VDA, it was triggered by the reform of the vehicle tax, and especially by the extremely successful clunker-culling program. Germany’s government hands €2.5K to everybody who drives his old car to the wrecking yard and gets a new ride. Supposedly, this was only helping low-budget imports. Not so, says the VDA. Compact and mid-sized cars are selling just as briskly as small ones. Also, says Wissman, “50 percent of the customers who drive their old one to the wrecking yard end up buying German.” Volkswagen sold 23 percent more, their Czech subsidiary Skoda added nearly 75 percent. Even their Spanish ugly duckling Seat added 19 percent. According to Volkswagen’s hometown paper Wolfsburger Allgemeine, VW received orders for 125K Golfs in February, common are 40K-50K for the month. Instead of sending workers home, VW is now planning special weekend shifts to keep up with the demand. Certain Golf models have delivery times until June.
The only ones left behind by Germany’s Economic Miracle II are the luxury cars. Audi is doing OK with an increase of 0.4 percent. BMW lost 25 percent and Mercedes shed 26.9 percent in February. Their Smart marque rose by 16 percent.
All in all, giving money to people who buy cars seems to work better than handing it to people who, well, uh, buy Gulfstreams.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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grog: Yeah but with the exchange rate, that’s worth around $500 US. We don’t call our currency the 21st Century lira for nothing. Wow, obviously you’ve been in a coma since last July. Whew, wait til you get caught up on the business news … I suggest you sit down first … Sit down because.....the dollar went from merely being worth nothing vs the euro to being worth nothing +1? Yeah, it's gotten better. Still crappy.
This is just a short term gimmick. You have the same problem as with the zero percent financing. Once that was implemented after 911 there was no way to go back to normal business and you pull future sales ahead. This is just a dead cat bounce. The way out of this mess is to cut government spending and taxes and that isn't supported by the voters. And so the economy is going kaput.