Germans Stumbling As Aid Bypasses Conventional Buyers.
“By focussing exclusively on the promotion of electric cars, more than 90% of the car market was ignored”
Germany, Europe’s biggest car and SUV market, is unlikely to respond to government aid aimed at reigniting coronavirus-blitzed sales, because of the insistence of politicians it bypassed the huge conventional sector and spent the money on fledgling electric vehicles.
This endangers not only the big German manufacturers, but also the carmakers from the rest of the European Union (EU) who rely on this huge market for their success too.
That’s the conclusion of a report from the Center for Automotive Research in Duisberg, Germany.
The report coincides with the latest sales report from the European Automobile Manufacturers Association, known by its French acronym ACEA.
ACEA said sales of new cars and SUVs in the EU fell 22.3% in June to 950,000 compared with the same period of 2019, and compared with a drop of 52.5% the previous month. France has introduced a generous package of incentives for car sales including internal combustion engine vehicles. Sales in France in June rose 1.5% to 234,000. In Germany sales fell 32.3% in June to 220,000. In 2019, Germany was Europe’s biggest market with sales of 3.6 million. Germany also has unveiled a big support package for car sales, but the help was focussed on electric cars, still a small proportion of total sales.
Professor Ferdinand Dudenhoeffer, author of the CAR report, said Germany’s economic stimulus package missed a great opportunity to fight the recession by not stimulating the overall car market.
“By focussing exclusively on the promotion of electric cars, more than 90% of the car market was ignored. The European market, which is important for the exports of the German industry, will take up to 10 years to get back to the hold (pre-coronavirus). Germany would have had the chance to move the market through a strong auto stimulus program,” Dudenhoeffer said.
No British support
The British auto market has received no support, and the industry body, the Society of Motor Manufacturers and Traders, isn’t happy.
“We urgently need government to expand its strategy and introduce sector-specific measures for U.K. auto to support cash flow such as business rate holidays, tax cuts, and policies that provide broader support for consumer confidence and boost the big ticket spending that drives manufacturing. Until critical industries such as automotive recover, the UK economic recovery will be stuck in low gear.” Mike Hawes, SMMT Chief Executive said.
In June car and SUV sales in Britain fell 34.9% to 145,000.
Dudenhoeffer said the German market would have been very responsive to any general targeted aid because many cars in the country are old. In the big markets of Western Europe – Germany, France, Britain, and Italy – Germany’s cars are the oldest. It wouldn’t take much of a stimulus to persuade consumers it was time they got new wheels.
“9.7% of the cars on German roads are older than 20 years. That corresponds to 4.6 million cars. The data show how great the chance would be to set a strong impetus in the German car market with a real economic stimulus program. An impulse that would also benefit Europe,” he said.
“The solution can only be to stimulate demand from private car buyers, and this can be encouraged with exciting incentives in economically difficult and uncertain times. It is wrong that combustion engines were taken out of the funding framework,” Dudenhoeffer said.