by New car sales in Germany experienced growth in 2023, according to official data released on Thursday. However, the discontinuation of government subsidies resulted in a decline in the sales of electric vehicles in favor of fossil-fuel models.
In Europe’s largest economy, a total of 2.8 million new cars were sold last year, witnessing a 7.3 percent increase compared to 2022, as reported by the KBA federal transport authority.
Among the different types of engines, the sales of petrol vehicles showed the highest increase, rising by 13.3 percent to 979,000 units in 2023.
This surge in sales led to an overall increase in market share for petrol and diesel-powered cars, which had been experiencing a relative decline in recent years.
In contrast, the sales of battery-powered vehicles saw a more modest increase of 11.4 percent to 524,000 units, while plug-in hybrids witnessed a significant decline with sales decreasing by more than half to 176,000 units.
The popularity of plug-in hybrids had surged at the end of 2022 as customers rushed to take advantage of government incentives before they were phased out.
As a consequence, the government allowed corporate subsidies for fully-electric vehicles to expire at the beginning of September 2023 and abruptly put an end to a consumer support scheme in mid-December.
The termination of these subsidy programs has caused a significant setback for the electric car market, resulting in a decline in battery electric vehicle sales in recent months.
According to Constantin Gall, an analyst from EY, the lack of state support will lead to a decrease in new electric vehicle registrations this year. Gall highlights that the market for electric cars is not yet self-sufficient and heavily relies on government subsidies.
Germany’s vital automotive industry has experienced a modest recovery following the disruptions caused by pandemic-related shutdowns and supply chain challenges in recent years. Companies have been working through a backlog of orders.
However, sales are still below pre-pandemic levels, and the outlook has become increasingly pessimistic due to high inflation, which has raised manufacturing costs and reduced households’ purchasing power, thereby cooling down demand.
Gall predicts that given weak economic growth, 2024 could be another challenging year for the auto industry.
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1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
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