Manufacturers work off old orders: Special boom boosts car market – lull foreseeable

Manufacturers work off old orders
Boom boosts car market – lull foreseeable

Supply bottlenecks for many components slowed down the delivery of passenger cars for a long time. But now the manufacturers can hand over the cars that were ordered some time ago. As a result, sales increase. However, noticeably fewer new orders come in. This could lead to higher discounts again in the foreseeable future.

In view of the easing supply bottlenecks, the German car market is getting better and better. In March, a good 281,000 cars were handed over to customers, around 17 percent more new cars than a year ago, according to the Federal Motor Transport Authority. Car sales had already risen slightly in February. However, the car market is far from having reached the level before the Corona crisis in 2019. The recovery is mainly supported by the thick order cushion that manufacturers have built up during the chip shortage and fragile supply chains. Experts expect the special boom to end soon, since there are no new orders due to the weak economy and high inflation.

Initially, however, the high order backlog will ensure high capacity utilization in the factories. “Fortunately, the recovery on the new car market is gaining momentum. After a relatively weak start to the year, a strong spring upswing is now looming,” explained Peter Fuss, partner at the management consultancy EY.

In a few months, however, the falling order intake should slow down the upward trend. Then the competition between the manufacturers should increase and discounts should play a bigger role again, says Fuss. For the year as a whole, he expects the German new car market to grow by around ten percent.

Domestic orders collapse

The importers’ association VDIK assumes that the second quarter will also go well for the industry. “In view of the weak order intake, however, this will not remain the case in the long term,” said Reinhard Zirpel, head of the association. There are already signs of a downturn: According to the VDA, 31 percent fewer domestic orders were registered in March. In the first three months it was 35 percent less than in the previous year. Ten percent fewer orders were received from abroad.

Production is currently still booming. After more vehicles rolled off the production lines in this country than expected in the first quarter, the Association of the Automotive Industry raised its forecast by 100,000 vehicles to almost 3.8 million cars. Nevertheless, the pre-crisis level is unlikely to be reached. In 2019, around 4.7 million cars rolled out of the factories.

According to the KBA, almost all German brands recorded growth in new registrations in March. The increase was particularly high at Mercedes-Benz with plus 38 percent and VW with plus 29.5 percent. BMW sold 7.3 percent more of its vehicles. Among the various drive types, purely electric cars grew particularly strongly. Their share of new registrations was 15.7 percent in March (previous year: 14.3 percent). A total of 666,818 new cars came onto the roads in the first three months, an increase of 6.5 percent.

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