German electric vehicles share cold comfort against 34% deficit in overall auto market

Germany, Europe’s biggest car market, saw plug-in electric vehicles take a 25.5% share in July. This increase compared to 22.6% year-on-year. Overall auto market volumes were down about 34% from seasonal norms, to 205,911 units, the worst July performance in many years. The Fiat 500e was again the best-selling all-electric car in Germany this month.

July’s combined plug-in result of 25.5% included 14.0% fully electric vehicles (BEVs) and 11.5% plug-in hybrids (PHEVs). This compares to respective shares of 10.8% and 12.8% in July 2021.

In terms of volume, BEVs were up 13% year-on-year to 28,815 units, while PHEVs were down 21% to 23,712 units. Combined plugin volumes were therefore down around 5.5% year-over-year.

This is a small volume impact compared to the overall market, down 13% from July 2021 and down 34% from seasonal norms (which pre-covid were approximately 312,000 units).

The main BEVs in Germany

With Tesla on a slow ebb logistics month (despite the Brandenburg plant just starting to see decent volumes), the Fiat 500 again took pole position in July, with 2,170 units.

The Volkswagen brand had a good month, taking 2nd, 4th and 5th positions.

Notable new faces in the model ranks include the Volkswagen ID.5, Seat Cupra Born and Renault Megane. The VW ID.Buzz is still very early on its ramp, at just 34 units in July.

Existing models that moved up the ranks in July include the Opel Corsa, VW ID.3 and VW Up!, Dacia Spring, Opel Mokka and Audi Q4 e-tron. In most cases, their rise was not due to an absolute increase in volume compared to June, but rather to the underperformance of other BEVs taking a break after the end-of-Q2 surge.

For Tesla, we have to assume that a good portion of the 1,035 Tesla Model Y deliveries to Germany in July came from the Brandenburg plant. We know that not all Brandenburg production is exclusively for the German market – some ends up in Norway and elsewhere. But of those registered in Germany in July, perhaps half were produced locally? Share your thoughts on it below.

To go beyond the highs and lows of results month by month, let’s look at the performance of the last 3 months:

Compared to the previous period (February to April), the small Fiat 500 has moved from second place to the top, replacing the Tesla Model 3. This is a great result for the pint-sized super mini, which is the right size car for many Europeans.

A significant change in position also came from the recent introduction of the Volkswagen ID.5 (“SUV coupe”) variant of Volkswagen’s electric MEB platform in the last 3 months. Essentially a fastback version of the VW ID.4, the newcomer helped the ID.4/ID.5 combo climb from the previous 8th place, to take 2nd place in the final table (the KBA counts them as one) .

The shout also goes to the Opel Corsa (another small hatchback) which had a good volume increase (2.3x growth), allowing it to climb impressively from 14th to 3rd place.

Here are the notable improvements of the last quarter compared to the previous period:

Tesla’s Model 3 saw the biggest downgrade in the last 3 months, falling from its usual position at the top (or near the top) all the way down to 26th place (and outside the top 20). Recall that the Model 3 was the best-selling BEV in Germany in 2021, and as recently as the first quarter of 2022.

This is likely only a temporary setback, largely due to production pauses in Shanghai during the first half of the year, and the Model 3 should be back in the upper ranks by the end of September or October. The Model Y also took a hit over the three months, but more modestly.

One thing to watch out for is which sibling has the highest volume for the rest of the year. Perhaps the Brandenburg factory producing the Model Y exclusively makes for an unfair comparison.

Here is a summary of the major ranking drops:

The usual disclaimer: Periodic volume variations sometimes reflect temporary regional allocation decisions, or production line batching, rather than significant changes in demand. However, Germany is by far the largest BEV market in the region, so if a model widely available in Europe performs poorly here (particularly over a 3 month window), it could be significant.

Another way to take a step back and examine the big trends is to look at the performance of the manufacturing group:

Compared to the February-April period, the Volkswagen Group retained the top spot in BEVs, with an impressive 65% growth in volume. Stellantis moved up one place to 2nd place (54% growth) and Renault-Nissan moved up 4 giant places to take 3rd place (37% growth).

Hyundai Motor Group remained flat, in 4th position. BMW moved up one place from 6th to 5th place (despite a 17% drop in volume), swapping places with Mercedes Group (down 28% in volume).

Tesla fell from 2nd to 7th place, with a 70% drop in volume. Again, this was largely due to Shanghai production pauses in the first half and should only be a temporary setback.

Outlook

There are too many macroeconomic uncertainties to have a clear view of what will happen to the German automotive industry and consumer market in the coming months. The price of natural gas – so critical to Germany’s overall industry and competitiveness – has risen almost 7 times compared to the European benchmark.

Germany’s biggest gas importer, Uniper, is now on the verge of bankruptcy, with potential losses of 10 billion euros this year, and has sought an urgent government bailout.

Economy Minister Habeck said on July 28 that Germany was facing its “greatest energy crisis ever”.

Habeck himself recently admitted that his fanfare “deal” in March with Qatar to import LNG to replace the Russian gas pipeline actually came to nothing. Habeck now says that “The Qataris decided not to make a good offerpoking fun at his own prior assurances. He was recently heckled by the public at lectures in Bavaria and accused of being a warmonger, according to the left-liberal newspaper Stern.

The long-running ZEW survey of industry and investor economic sentiment fell to its lowest level since 2008.

Commerzbank, Germany’s second largest lender, has released a report warning that unless the energy supply crisis can be resolved, rationing will severely affect industry and lead to a national economic contraction of 2. 7% in 2022. We have already seen consumer retail sales in the first half of 2022 fall by the largest amount in three decades, shrinking 8.8% in real terms, year-on-year.

As the German automotive industry is the centerpiece of European industry, my monthly report will necessarily follow these economic developments over the coming months. We have just seen that the overall volume of auto sales in July is down about 34% from seasonal norms. Even the combined plugin volume was down 5.5% year-over-year.

With traditional highway fuel prices at record highs, those with deep pockets who can still buy new cars will likely continue to favor plugins, so the share of plugins in new car sales should continue to rise. But against the backdrop of the industry headwinds above, one has to wonder about the economic health of the automakers supplying these vehicles. A few relatively wealthy new car buyers who want plugins aren’t going to support the entire German auto industry (nor the wider economy) and the millions of jobs involved.

What do you think of the outlook for the German automotive industry in the coming months? Please join the discussion in the comments section below.

 

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