The German car market is off to a bumpy start in 2023, with the number of new e-vehicle registrations in particular having plummeted. Data from the International Energy Agency (IEA) shows that new electric car registrations are expected to fall even more sharply over the next three years. This has serious implications for the entire automotive industry as there will be less demand for both conventional and electric vehicles in the near future.

The car market got off to a weak start in the year, and the prospects for e-vehicles are likely to be even bleaker. A recent report predicts that EV registrations will plummet in 2023, an alarming development for those worried about the future of green transport. The study indicates that this drop in registrations is due to a lack of consumer acceptance and poor battery technology.

At the end of 2022 there was a boost in the German car market. However, according to the Federal Motor Transport Authority (KBA), only 179,247 passenger cars were newly registered in January - a decrease of 2.6 percent compared to the same month in 2021 and the second lowest value for a winter month since 1991. After a strong finish in 2022, the German car market weak from the starting blocks. In January, the Federal Motor Transport Authority (KBA) recorded only 179,247 newly registered passenger cars, which is around 2.6 percent less than in the same month last year and the second lowest level in the winter month since 1991.

Electronic car market collapses massively

At the beginning of the year, electric vehicles were in a steep downward trend. Around 27,000 electric cars and plug-in hybrids were newly registered in January. This corresponds to a decrease of 32 percent. The number of pure electric vehicles (BEVs) fell by 13.2 percent to 18,136 compared to the same period in 2022. The decline in plug-in hybrids (PHEV) was particularly drastic, with sales more than halving compared to January 2022 (8,853 vehicles). A trend in sales of conventional cars that is continuing: In January 2019, almost 1.7 million vehicles were newly registered compared to more than 2 million in January 2022. The decline was mainly due to an increase in used car sales.

Registrations for plug-in hybrids fell drastically, by 53.2% to 8,900 vehicles. Since the beginning of the year, these vehicles are no longer eligible. The KBA also reported 18,100 new registrations of battery-powered vehicles (-13.2%).

The share of plug-in vehicles in the overall market fell to 15 percent in January. However, throughout 2022 it averaged 31 percent and in December 2022 it was well over half that number. On the other hand, more new passenger cars had combustion engines again in January. The proportion of diesel vehicles was 21.9 percent, that of petrol vehicles 39 percent.

“The decline in electric vehicles was to be expected, since all cars that were able to do so were still registered in the final spurt of 2022 in order to take advantage of the higher subsidy premiums,” explained ZDK Vice President Thomas Peckruhn, spokesman for the brand trade in Germany.

The slump in PHEV is also due to the end of the subsidy from January 1st, and even with battery-powered cars there is greater reluctance on the part of customers because of the reduced purchase premium. Added to this is the lack of available cars.

The decline in the private market is a concern for traders

The dealers are also concerned about the overall significant decline in private new registrations. The number of passenger cars newly registered in January fell by 12.1 percent to 56,700 units, their share was 31.6 percent. According to Peckruhn, a trend is continuing here that began in the third quarter of last year in the form of declining incoming orders.

Electromobility must not become a kind of prosperity mobility

"Politicians and industry will have to come up with something," Peter Fuss, automotive expert and partner at EY Consulting, warned that electric mobility could become a mode of transport that the majority of people cannot afford. Electric cars are significantly more expensive than their petrol-powered counterparts, and there is only a limited choice of electric vehicles in the mini and compact classes.

“The upper electric class will continue to boom – the purchase premium doesn’t play a role here anyway,” Fuss continued.

In his estimation, plug-in hybrids will only be attractive for company vehicles. Even if the incentive to buy has disappeared, the tax advantage for company cars remains. In relation to the overall market, Fuss predicts only a slight increase in new car purchases in Germany for 2023.

In his opinion, plug-in hybrids will only be of interest as company cars, since the state purchase premium has been abolished, but the tax advantage for company cars has been retained. For the market as a whole, Fuss expects single-digit growth in new car sales in Germany in 2023.

Brand manufacturers BMW and Opel with heavy sales losses

Among the German brands, Porsche (plus 19.3 percent), Mercedes (plus 14.5 percent), Ford (plus 3.4 percent) and VW (plus 1.3 percent) performed well, as the KBA announced. In contrast, Opel (minus 34.4 percent) and BMW (minus 24.7 percent) missed their new registration results from the previous year. Audi also attracted fewer customers to its dealership, registering a drop in sales of around 1%.

Of the big brands (with a market share of two percent or more), Tesla saw the largest percentage increase at +912.2%. Dacia, Toyota and Skoda also posted double-digit growth at 42.1%, 28.3% and 12.6%, respectively. On the other hand, Seat and Renault saw significant declines of 38.8% and 36.2%, respectively. Hyundai was down 6.9% and Fiat was down 3.4%.

The auto industry is particularly concerned about the massive drop in registrations in the private car market. Peckruhn emphasized that this is a continuation of a trend that had already begun in the third quarter of last year, when orders fell and market share fell: "With the changed funding conditions, the federal government has the self-postulated goal of a strong ramp-up of e-mobility done a disservice." The customers, but also the trade would have to receive reliable framework conditions, “otherwise the targeted approval quantities cannot be achieved”.

After the peak in December, disappointment followed in 2023: the lack of new registrations of electric cars and plug-in hybrids was the main reason why the German car market slipped into the red in January. Dealers are particularly worried about the shrinking share of the private market.