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Economy News VDA Expects Car Production in Germany to Decline

Editor: MA Alexander Stark

At the Geneva Motor Show, the German manufacturers wanted to score points with "numerous world premieres", the VDA association announced. Yet the mood is subdued: Risks such as a hard Brexit, an economic downturn and trade disputes are hanging over the industry, while car production in Germany is set to fall.

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The German Association of the Automotive Industry (VDA) warns that car production in Germany is expected to drop by about 5 %.
The German Association of the Automotive Industry (VDA) warns that car production in Germany is expected to drop by about 5 %.
(Source: gemeinfrei / Pexels )

The German auto industry expects a significant decline in domestic production this year. The German Association of the Automotive Industry (VDA) announced on March 2 that the number of vehicles rolling off the German production lines is likely to fall by around 5% to 4.8 million. Foreign production, on the other hand, is expected to increase by 3% to 11.6 million passenger cars. This was due to the slowdown in the economy, trade and duty risks, as well as the construction and expansion of plants in the USA, Mexico and China.

“This year, too, foreign production will increase more strongly than the total passenger car production of our Group brands," said Bernhard Mattes, President of the Association. However, employment at German car production plants should remain stable in 2019. Last year, the average number of employees in Germany increased by 14,400 to 834,400. “This is the highest level of employment since the German reunification," Mattes said.

All markets are at a high level. In Europe, the association expects demand to remain stable, in China demand to remain approximately at the previous year's level, and in the USA a slight decline. A precondition, however, was that the trade and economic conflicts be resolved constructively.

Under this assumption, the European market would remain stable at 15.6 million passenger cars. The US market is expected to fall slightly by 2% in 2019, albeit with 16.9 million vehicles at a high level. If the trade conflict is resolved, the Chinese passenger car market could reach the previous year's level of 23 million cars.

"Hard Brexit Must Be Prevented"

According to Mattes, a "hard Brexit" - Britain's withdrawal from the EU without a treaty - must be avoided. A no deal scenario would have serious consequences and pose significant risks for businesses and employees in the EU-27. In terms of numbers, Great Britain is Germany's largest car export partner. By 2018, exports from Germany had already fallen by 13% to 666,000 new cars.

Mattes urged the EU and the US during the trade talks to "do everything possible to achieve a constructive solution at the negotiating table". German manufacturers are now continuing to feel the effects of the downturn on the US car market: Volkswagen, Audi and Daimler's Mercedes-Benz USA brand reported declines in sales volumes for February. BMW did not make any progress. But the German car manufacturers are no exceptions.

According to the VDA, German manufacturers will also be presenting new models and car studies, including many electric and hybrid cars, at the Geneva Motor Show. "Over the next three years, we will invest more than 40 billion euros in electric mobility, and a further 18 billion euros in digitization, networked and automated driving," said the VDA boss. The range of models offered by German manufacturers will triple to around 100 e-models until then. However, more charging stations and incentives to buy are needed, he added.

This article was first published by Automobil Industrie.

Original: Svenja Gelowicz / Translation: Alexander Stark

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