Mayday! Mayday! We Are Rising!
Sick of sinking car sales? Two choices: Relocate to Germany. Or go to China. In both countries, #4 and #3 on the world’s GDP ranking, cars are flying off dealer lots at breakneck speed.
In Germany, Abwrackprämien-powered new car registrations rose nearly 40 percent in May, compared to May 2008, Automobilwoche [sub] reports. Forty friggen percent! And we thought 19.4 percent in April was strong. In the first 5 months, 1.63 million units were sold to Deutschland’s motorists. In the beginning of the year, everybody in Germany was worried that sales could be less than 3 million cars for the whole year. Now, im Gegenteil: 2009 looks like a record breaker.
China hasn’t reported full May numbers yet, but preliminary reports indicate a bumper crop of new bumpers. Ford China’s sales rose 49 percent in May, Gasgoo reports. Shanghai Volkswagen’s May sales erupted to the tune of 57 percent. Shanghai GM’s sales rose more than 50 percent in May. SAIC-GM-Wuling, General Motors’ mini-commercial vehicle venture in China, sold 442,000 vehicles in the first five months this year, up 49 percent. With these numbers under the belt, China should easily break the 10m unit number in 2009, most likely unseating the U.S.A. which keeps reporting dwindling numbers.
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.
More by Bertel Schmitt
Comments
Join the conversation
It doesn't bring car sales forward. I worked for more than 30 years for the German car industry, and if I know something, then it's the behavior of the German buyer. Owners of cars 9 years or older usually don't buy new. They buy used. So what does the program do? - It creates demand for new cars from a customer segment that usually wouldn't buy new. Incremental sales. - It lowers demand for used cars under 9 years, making their prices sink. - Which makes new car prices look even more attractive in comparison. - Value of cars 9 years or older rises (however, you can't just buy a clunker and trade it in, must have owned it for at least a year to qualify.) - Steel prices sink (more scrap) - Used or reconditioned parts prices sink - Fleet gets marginally younger. Germany has 50m cars at an average age of 8.5 years. Program capped at 2m cars. Barely a dent. - At 19% VAT, program is pretty much revenue neutral - Most of all, it keeps the factories open until the September elections ..... - Unintended consequence: Used American cars sell better in Africa or Middle East. Used to be German clunker central. No more supply!
Thanks Bertel, I couldn't have said it better. Yes the economy is not going to get fixed anytime soon. And yes, we have increased the deficit by a paltry amount considering the 8 years of punting the financial football down the road. Its going to take awhile to get it back running again. I'm for any idea that will stimulate any kind of buying, especially a major item like a car. Chyrsler lots have thousands of clunkers clogging their lots as does GM due to stupid CEO mindthink and overproduction. The average person who only buys used is suddenly in a very good position to buy what most people would not. Yes, its a temporary spike in the economy, but as long as it gets dealer lots to empty the langorious Pacifica and equally dispondent Impala from their rooted positions then I'm for it. This plan will get the 6-9 year old cars off the road. You know the ones I'm talking about. The Oldsmobile Silhoutte blowing blue smoke and riding on its spare donut, the 1996 Lumina with cancerous black paint and cracked rear view, and the desparately ugly 2004 Aztek/Rendezvous will be taken off to pasture and subsequently given a decent burial.