By on June 3, 2010

Remember carmageddon? It is not forgotten in Germany. As a matter of fact, Germany’s biggest carmageddon happened last month, in May. While champagne corks popped in the U.S., propelled by a 19 percent plus in May, the Germans are crying into their beers. According to numbers released by the German Kraftfahrt-Bundesamt (KBA,) the new car market collapsed by heart attack inducing 35.1 percent in May. That’s not the worst part of the story.

The really bad part is that sales in May were 9.3 percent below the same month in the dark days of 2008. The graph above tells the story. Germany had averted carmageddon in 2009 by pumping massive amounts of Abwrackprämien (cash for clunkers) money into the market. Result: See red line above. In 2009, the German market jumped well over normal levels.

With the money missing, the market is going into serious withdrawal. See green line for 2010. Except for March, new car sales have been below 2008 levels for each month of the current year. The traditionally active spring selling season collapsed.

Have a look at January. When January 2009 sales disintegrated (red line) it spooked the German government into laying on the cash for clunker program. You see it working. Then sales dropped as the money was withdrawn. Many cars are built to order in Germany, there were waits for delivery. The amphetamines, prescribed in Berlin, took a while to work themselves out of the system. With the market drug-free, we are now below crisis levels. Will there be Abrwackprämie, the Sequel? Only people on real drugs think so.

There is no end in sight. The headlines will get worse through June/July. By the end of the year, the numbers will have caught up with the new reality. So far, this is worse than the most pessimistic pundits projected.

In the first five months of the year of 2010, Germans bought 1.179,532 cars. That’s 450.000 less than in the same period of the prior year.

Small cars, the darlings of the Abwrackprämien high, are nearly unsalable. That segment shrunk by more than half. The formerly eschewed upper classes and SUVs enjoy a come-back from near extinction and are the only segments with growth.

As far as brands go, Mercedes-Benz is he only winner of the May slugfest. Daimler grew by 6 percent, mostly due to the brisk sales of the new E-Class. Ashen faces in Munich: BMW lost nearly 15 percent. The so-called volume manufacturer were seen lining up at the drugstores of Rüsselsheim, Cologne, and Wolfsburg, from where antacid shortages are reported. Opel lost 51.5 percent, Ford gave up 45.9 percent, VW said good-bye to 34.1 percent of 2099 May sales.

The import brands didn’t fare better, some worse. The few gains are by boutique brands on such a low level, that it could well be numerical flukes.

Bad omen: Lancia, which is supposed to be merged with the Chrysler and Dodge brands, is at the bottom of the list in May, with only 133 cars sold. Lada sold more (178.)

As far as the German market goes, I never subscribed to the pull forward theory. There was nothing to pull forward. Owners of clunkers usually don’t buy new. They buy used, a younger clunker. The thinking was that by luring that usually new-adverse segment into buying new, the missing new car buyers could be replaced. They still are missing. As Germany gets older, they might never be back. What’s back is the used car market. Solidly (+13,4 percent) up again in May.

If you want to cry for Germany, or watch with glee the belated carpet bombing of the German market, then you may download the data in all their ugliness here. In German, but the numbers need no translating. They are abgrundtief schrecklich (abysmally appalling.)

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12 Comments on “Germany In May 2010: Car-Nage...”


  • avatar
    lilpoindexter

    Fasten your seatbelts.

  • avatar
    ChesterChi

    Who would have thought that pulling sales forward in time with incentives would have this effect ? Unpossible !

    Perhaps the govt thought that everyone would get caught up in a frenzy of new car buying, and keep mindlessly buying more and more cars even when the incentives ended ?

  • avatar
    philadlj

    So many who would have bought a car in 2010 bought one a year early, in 2009, instead, when Cash for Clunkers was in place. Why would those people buy another car just a year later?

    • 0 avatar
      hreardon

      The only reason I can conceive of is if I had a real clunker, worth several hundred dollars or up to a few thousand, and it was on its deathbed.

      Otherwise, yea, not so much.

  • avatar
    hreardon

    Thanks for the data points there, Bertel. Very interesting, and again why Americans (and especially American sales/marketing folk) need to get their heads around European buying tendencies and realize they are different from American tendencies.

    Cash for Clunkers and the German equivalent had slightly different impacts. In America, a deal is a deal and if there’s a sale, there seems to be a tendency for shoppers to buy whether or not they necessarily need the product in question. This doesn’t happen quite so much in Europe.

    I know of a number of people who took part in C4C, not because they *needed* the car, but because hell, there was a big sale and damn if they’re going to miss out! No, seriously. I laughed when I pointed out that they received a wash of a deal considering the little discounting that took place on the new car and the fact that their “clunker” would have probably fetched just as much had they gone in a week after the program ended.

    Long story short: these are all games played by the political class to curry favor and demonstrate “we’re doing something to put the economy back to work!” Little do they realize how much this distorts the market.

  • avatar

    So Bertel, this will be the year. The year Brazil will pass Germany in car sales. Wow! It’s almost unbelievable! According to my post Brazil In May: Sales Slide 9.66 Percent. Or Gain 1.64 (http://www.thetruthaboutcars.com/brazil-in-may-sales-slide-9-66-percent-or-gain-1-64/),Brazil has sold in the first 5 months in 2010 a total of 1,316,824 against Germany’s 1,179,532. A difference of 137,292…
    Wow. I’m aghast. The world is upside down.

    Guess one man’s nightmare is another man’s dream. Or something to that effect.

  • avatar

    Notice to all the folks who had complained last year that the reporting of booming German sales and tanking U.S. sales was a big smear job, intended to humiliate one, and to aggrandize another nation (of which I could care less btw, a patriot I’m not):

    We report the facts as they are handed to us.

    • 0 avatar
      th009

      @Bertel,

      Would you be able to add the 2007 sales to the chart? That would give us one relatively “normal” year as a reference point.

    • 0 avatar

      This is a chart provided to me by the German government …I must take it as it is. And since it’s 6am in China, it’s time to get some sleep. Now for a fee …

    • 0 avatar
      Arete

      Germans bought 3.148 million vehicles in 2007. They bought 3.090 million in 2008. The source I found stated that all of the 60k difference happened in the 4th quarter (after the crisis).

      So if you assume that 2007 and 2008 were normal years (yes, they were low compared to the early 2000′s, but Germany isn’t exactly growing in population), 2010 isn’t looking that bad. Yes, there is some drop from the “normal” 2007-2008 level, but it’s much smaller than the gain in 2009, so it appears quite a lot of the sales in 2009 were incremental.

    • 0 avatar
      th009

      @Arete, thanks for the research. If we can consider (most of) 2008 normal, the last three months’ sales are then running only about 10% below normal levels. (There was clearly some serious hangover effect still in January and February.)

      Car-nage? Car-mageddon? Compared to what the US market has seen, definitely not.

  • avatar

    It is still an astonishing strong market, given the mix of overpriced cars, overtaxed gas, high insurance premiums (rises up to 100% in the last two years), high maintenance costs here.
    But the current year’s sales might end well below the blue and red lines above.
    Let’s wait until next weekend when the German government will have their scheduled “brain” storming to cut down expenditures (presumably 1%) and to increase income/taxes (ca. 99%) in order to maintain the facade of a well-ordered state (yes, there are worse, I know). I’ll bet that they will come up with some new unpleasant surprises for drivers.


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