German car sales plummet to lowest level in nearly three decades

German car sales plummet to lowest level in nearly three decades
The A4 in Dresden, completely carless on Sunday. Photo: DPA
New registrations of cars on German roads plunged in March to the lowest in almost three decades, official data showed Friday, as restrictions to slow the spread of the coronavirus inflicted a heavy blow.

Sales tumbled 38 percent year-on-year to just over 215,100 according to data from the KBA vehicle licensing authority.

“Necessary health policy measures, like the massive limits on public life, closure of car dealerships and limited ability to work in the licensing  offices” had braked the car trade, the VDA carmakers' federation said.

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Domestic demand fell 30 percent, while foreign orders were down 37 percent.

In a quarterly comparison, sales in January-March were down 20 percent year-on-year.

“April is likely to be even more catastrophic,” analysts from consultancy EY predicted.

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Jobs at risk

In European virus epicentre Italy, where lockdown restrictions are even harsher than in Germany, transport ministry figures released Thursday showed sales collapsing by more than 85 percent year-on-year in March.

At just over 28,300 cars registered, Italian sales were “at a level comparable with the early 1960s, when mass car ownership in our country was just getting started,” experts at car industry research centre Promotor commented.

“Forecasts for the coming months call for similar or even worse falls until the crisis is over,” they added.

In Germany, “even if the acute crisis were overcome in summer, the economic  and social consequences — massive increase in unemployment, plunges in  income, bankruptcies — will continue to squeeze demand strongly,” EY predicted.

Ratings agency Moody's expects the global auto market to contract 14 percent in 2020.

Up to 100,000 of the roughly 800,000 jobs in Germany's massive auto sector could be at risk, according to recent estimate from University of St. Gallen expert Ferdinand Dudenhoeffer.

Weathering the storm

To weather the impact of the coronavirus restrictions, major manufacturers like Volkswagen, Mercedes-Benz parent Daimler and BMW have closed factories and placed tens of thousands of workers on government-funded shorter hours schemes.

“Circumstances as serious as this can threaten the existence of even a large company,” BMW boss Oliver Zipse said in an interview circulated to staff.

“We have already introduced large-scale measures, in particular to secure our liquidity,” Zipse added, calling the steps an “absolute priority” but without going into details.

High-end competitor Daimler, which builds Mercedes-Benz cars, said Thursday it had agreed a new 12 billion credit line with banks, “increasing its financial flexibility”.

A hint at the pressure on carmakers came from Volkswagen boss Herbert Diess last week, when he said virus-imposed shutdowns were costing the sprawling 12-brand giant up to €2 billion per week.

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Chancellor Angela Merkel said this week that restrictions on public life would be extended to at least April 19, including a ban on gatherings of more than two people and the closure of many businesses such as restaurants.

Meanwhile the Robert Koch Institute (RKI) responsible for disease control said Friday the measures were beginning to slow the spread of the virus.

“We are seeing that the spread of the virus is getting slower… it's working,” said RKI president Lothar Wieler, stressing that restrictions on public life “need to be maintained” and it was too early to claim victory.

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