Plunging German car production heralds year of ‘transformation’
Carmakers built just 4.7 million cars in Germany in 2019, industry data showed Monday, squeezing production to its lowest level since 1997 as US-China trade tensions sapped vital foreign markets.
The powerful VDA carmakers’ club said output had tumbled nine percent year-on-year, blaming “weaker international demand” for the fall.
The lower appetite from abroad comes on top of demanding technological change and tighter emissions restrictions complicating life for carmakers -- long a pillar of Europe’s largest economy.
“The car industry faces a massive transformation,” in 2020, industry expert Stefan Bratzel of the Center for Automotive Management said.
With consumer spending buttressing the domestic market even as economic growth slowed, new registrations of cars on German roads booked an increase of five percent, at 3.6 million.
But auto exports from Germany to the rest of the world fell even more sharply than production, tumbling 13 percent to 3.5 million.
“The fall in car production means Germany continues to lose significance in the global auto industry,” said Ferdinand Dudenhoeffer of the Center Automotive Research.
Around the world, car markets have been battered by the effects of the American trade conflict with China.
Last year saw carmakers complain that falling global demand was eating into their business just as massive investments are needed in research and development.
Companies are pumping cash into high-tech projects like automated driving, and switching focus to hybrid or all-electric vehicles from internal combustion engines as they race to meet new emissions limits.
From next year, carmakers must achieve average carbon dioxide (CO2) emissions of 95 grammes per kilometre across newly-sold vehicles in the European Union, on pain of hefty fines.
“The atmosphere is comparable to when cash was switched over from Deutsche Marks to euros on January 1, 2002,” Der Spiegel magazine wrote citing industry insiders.
“The EU’s CO2 legislation is the most important reason” for the big changes set to sweep the car industry, analyst Bratzel said.
CO2 limits and other structural factors threaten the auto firms’ pride of place in the German economy.
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