February Car Sales in Germany Remain Completely Flat As Market Stagnates

The German passenger car market posted a completely neutral result in February in terms of volume growth, with the market almost mirroring exactly the sales volume figure it recorded in 2011, at 224,318 units, according to the latest set of data released by German government vehicle agency the KBA. This meant that the market recorded a growth rate of precisely 0.0%, although it should also be stated that there was an obvious calendar effect on February's sales volume in the form of the leap year. This meant that February 2012's sales were in real terms around 4–5% down on February 2011. For the year to date, which obviously comprises just two months of data so far, the combined German market was down 0.2 year-on-year (y/y) to 434,513 units.

On a brand-by-brand basis, Germany's biggest selling original equipment manufacturer Volkswagen (VW) actually managed to expand its sales during the month and outperform the overall market, with sales rising by 2.7% y/y to 50,207 units. Sales were helped by the new up! A-segment city car now coming fully on stream, although the company's two best-selling models the Golf and the Polo have now entered the fourth and third years of their model cycles, respectively, which is likely to have some negative impact on the company's sales during the rest of the year, although the Mark 6 is set to be replaced at the end of the year, after a very short model cycle. Second-placed brand Mercedes-Benz is currently enjoying a positive phase in its model cycles, having just launched the well-received new B-Class, while its sister model the new A-Class is to be debuted at this week's Geneva Motor Show (Switzerland) and will be rolled out for sale in Germany over the coming weeks. The positive reception given to the B-Class helped the company's sales rise by 8.5% y/y to 19,423 units. BMW posted a 3.5% y/y decline in sales to post 18,211 units in sales for the month, which translated to a 3.5% y/y fall in volumes in comparison with February 2011. BMW's sales momentum will pick up in the next few months, in line with the launch of the new F30 3-Series, which was launched in February in the German market. The company's mainstream model range is currently young and well regarded, so BMW's sales performance in comparison with that of Mercedes-Benz could be regarded as slightly disappointing. The 3-Series has yet to come fully on stream, however, in terms of fulfilling advanced orders or rolling out all the model variants, so the world's best-selling premium car will drive momentum when this starts to occur. Audi was in the fourth spot, and the German big-three premium brands knocked their non-premium rivals into the lower positions on the table. Audi's sales rose by 4.4% y/y to 17,870 units. Audi will also receive a sales boost in the coming months through the launch of the latest iteration of its new mainstream compact model in the form of the A3.

Outlook and Implications

It is somewhat inevitable that the German passenger car market would return to a form of stability after the volatility of recent years, and this is proving to be the case so far in 2012. The market is likely to exhibit somewhat stagnant sales in 2012 as a result of a number of factors. The current sales rate of the German market is on track to equal IHS Automotive's current forecast for the year of 3.10 million units, which is a mild decline of just 2.2% on the figure of 3.17 million units the market recorded in 2011. As IHS Global Insight's latest economic analysis of the German economy explains, it will be restrained by recessions elsewhere in the Eurozone but strengthen throughout 2012. Ramifications of the Eurozone sovereign debt crisis and associated European banking-sector risks—involving recurring financial-market jitters and major fiscal-consolidation efforts across Europe—are expected to limit German economic growth momentum during 2012 but not prevent renewed recovery. Leading indicators such as the Ifo and purchasing managers' indices have turned higher again since November/December 2011, underscoring the German economy's resilience because of its strong international competitiveness and fairly healthy fundamental economic indicators. That said, the latest forecast for the German economy predicts a marked slowdown in GDP growth compared with that recorded during the recovery in 2010 and 2011, with GDP falling from 3.1% in 2011 to 0.6% in 2012. The market will also receive renewed impetus in some areas from some of the key new model launches that have already taken place and will continue to take place, many of which have been highlighted above in the form of the BMW 3-Series, Audi A3, and Mercedes-Benz A-Class, and these new launches will help counteract some of the effects of slowing consumer and business confidence as a result of the difficulties in other Eurozone countries.