German passenger car registrations fall in November
The German passenger car market posted another significant decline in November. Registrations fell 9.9% y/y during the month to 272,674 units, according to the latest set of data from the German federal motor vehicle authority. There was no calendar effect during the month. For the first 11 months of the year, the increase in registrations has decelerated to 0.4% y/y, to 3,198,720 units. In terms of the passenger car fuel split, there were roughly equal declines in registrations of diesel and gasoline (petrol) vehicles; this has seldom been the case in the last 18 months, during which diesel sales have generally declined and gasoline cars have increased their share. Sales of gasoline vehicles fell 12.5% y/y to 163,240 units during the month, which equated to a 59.9% share of the market during the month. For once, diesel sales actually declined at a slightly slower rate than gasoline sales, down 10% y/y to 92,642 units, which equated to a 34.0% market share. There were 4,262 pure electric vehicles (EVs) sold in November, with equated to a 40.6% y/y increase in volumes and a 1.6% share of the market, while 11,672 hybrids were registered, which represented a healthy 34.7% y/y increase in volume and equated to a 4.3% overall market share during the month. There was actually a 38.5% y/y drop in registrations of plug-in hybrid electric vehicles (PHEVs) to 2,004 units (0.7% market share) as many key PHEV models such as the BMW 330e and Golf GTE have now been pulled from the market as a result of WLTP and in order to focus on the next generation of these models.
Outlook and implications
It appeared in November that the German passenger car market was still looking to recover from the switch to the WLTP that occurred on 1 September. We now await the December registration data, which will dictate whether the market finishes the year on a positive or negative note, but it would appear that the full-year outcome will be largely neutral after the volatility experienced two-thirds of the way through the year. This is in line with the overall economic outlook, which remains positive but also faces the increasing possibility of turbulence as a result of numerous global political and macroeconomic factors. Despite the persistently robust fundamentals for domestic demand, the external environment has increasingly been weighing down on German GDP growth during 2018. Exports have been dampened by various protectionist measures taken by the US administration, exacerbated by the withdrawal from the Iran nuclear accord and the associated re-imposition of sanctions, which is having significant third-party effects. Disruption linked to Brexit uncertainty also remains a threat to both trade and investment, although it carries less shock potential for the business cycle given the existing agreement on a transition deal. Germany's sudden plunge into negative growth territory in the third quarter, however, was largely related to depressing technical one-off factors linked to the car industry that will mostly unwind in the two subsequent quarters and thus temporarily restore quarterly growth of around 0.5% quarter on quarter. These factors are countered by consumer demand that remains underpinned by historically elevated confidence levels, an unemployment rate at 28-year lows, and above-average wage and pension increases earlier this year. German GDP is expected at around 1.6% for the full year in 2018, before gradually declining to 1.4% in 2019 and 1.2% in 2020. Moving into next year, the passenger car market should be buoyed somewhat by a number of key new model launches, such as the BMW 3-Series, while the ongoing renewal of Mercedes-Benz's compact car range will also help in the medium term. For the full year 2018, IHS Markit expects German passenger car registrations to come in at more than 3.3 million units and to remain almost entirely static moving into 2019.
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