The German auto market is off to a rocky start in 2023, with new electric vehicle registrations in particular plummeting. Data from the International Energy Agency (IEA) show that new registrations of electric cars are expected to decline even further over the next three years. This has serious implications for the entire automotive industry, as demand for both conventional and electric vehicles is set to decline in the near future.
The auto market got off to a slow start this year, and the outlook for electric vehicles is likely to be even bleaker. A recent report predicts that new registrations of electric vehicles will plummet in 2023, an alarming development for those concerned about the future of eco-friendly transportation. The study points out that this decline in registrations is due to a lack of consumer acceptance and poor battery technology.
The German auto market saw a surge at the end of 2022. However, according to the Federal Motor Transport Authority (KBA), only 179,247 new passenger cars were registered in January—a 2.6 percent decline compared to the same month in 2021 and the second-lowest figure for a winter month since 1991. After a strong finish to 2022, the German car market got off to a weak start. In January, the Federal Motor Transport Authority (KBA) recorded only 179,247 newly registered passenger cars, which is about 2.6 percent fewer than in the same month of the previous year and the second-lowest figure for a winter month since 1991.
The electronic auto market is experiencing a massive slump
At the start of the year, electric vehicles were on a steep downward trend. In January, approximately 27,000 new electric cars and plug-in hybrids were registered. This represents a 32 percent decline. The number of pure electric vehicles (BEVs) fell by 13.2 percent compared to the same period in 2022, to 18,136. The decline was particularly drastic for plug-in hybrids (PHEVs), whose sales more than halved compared to January 2022 (8,853 vehicles). A trend in conventional car sales that continues: In January 2019, just under 1.7 million vehicles were newly registered, compared to more than 2 million in January 2022. The decline was primarily due to an increase in used car sales.
Registrations of plug-in hybrids have fallen sharply, by 53.2% to 8,900 vehicles. Since the beginning of the year, these vehicles have no longer been eligible for subsidies. The KBA also reported 18,100 new registrations of battery-electric vehicles (-13.2%).
The share of plug-in vehicles in the overall market fell to 15 percent in January. However, for the whole of 2022, it averaged 31 percent, and in December 2022, it was well over half that figure. On the other hand, more new passenger cars had internal combustion engines again in January. The share of diesel vehicles was 21.9 percent, while that of gasoline-powered vehicles was 39 percent.
“The decline in electric vehicle sales was to be expected, as all passenger cars eligible for registration were registered in the final stretch of 2022 in order to take advantage of the higher incentive payments,” explained ZDK Vice President Thomas Peckruhn, spokesperson for the brand-specific automotive trade in Germany.
The decline in PHEV sales is also attributable to the expiration of the subsidy on January 1, and even among battery-electric vehicles, customers are showing greater reluctance to buy due to the reduced purchase incentive. Added to this is the shortage of available vehicles.
The decline in the private market is causing concern among dealers
Dealers are also deeply concerned about the overall sharp decline in new registrations by private individuals. The number of new passenger cars registered to private individuals fell by 12.1 percent in January to 56,700 units, accounting for 31.6 percent of the total. According to Peckruhn, this marks a continuation of a trend that began in the third quarter of last year in the form of declining order intake.
Electric mobility must not become a form of luxury transportation
“Politicians and industry will have to come up with a solution,” said Peter Fuß, an automotive expert and partner at EY Consulting, warning that electric mobility could become a mode of transportation that most people cannot afford. Electric cars are significantly more expensive than their gasoline-powered counterparts, and there is only a limited selection of electric vehicles in the subcompact and compact classes.
“The luxury electric vehicle segment will continue to boom—the purchase incentive doesn’t play a role here anyway,” Fuß added.
In his view, plug-in hybrids will only be attractive for company vehicles. Even though the purchase incentive has been eliminated, the tax benefit for company cars remains. Looking at the overall market, Fuß forecasts only a slight increase in new car purchases in Germany for 2023.
In his view, plug-in hybrids will only remain attractive as company cars, since while the government purchase incentive has been eliminated, the tax benefit for company cars has been retained. For the overall market, Fuß expects single-digit growth in new car sales in Germany in 2023.
Car manufacturers BMW and Opel report sharp drop in sales
Among German brands, Porsche (up 19.3 percent), Mercedes (up 14.5 percent), Ford (up 3.4 percent), and VW (up 1.3 percent) performed well, according to the KBA. In contrast, Opel (down 34.4 percent) and BMW (down 24.7 percent) fell short of their new registration figures from the previous year. Audi also attracted fewer customers to its dealerships, recording a sales decline of around 1 percent.
Among the major brands (with a market share of 2% or more), Tesla recorded 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 suffered significant declines of 38.8% and 36.2%. Hyundai recorded a decline of 6.9% and Fiat a decline of 3.4%.
The automotive industry is particularly concerned about the sharp decline in new registrations in the private passenger car market. Peckruhn emphasized that this marks a continuation of a trend that began in the third quarter of last year, when orders declined and market share fell: “By changing the subsidy conditions, the federal government has done a disservice to its own stated goal of a strong ramp-up of e-mobility.” Customers, as well as dealers, must be provided with reliable framework conditions, “otherwise the targeted registration volumes cannot be achieved.”
After peaking in December, 2023 brought disappointment: the lack of new registrations for electric cars and plug-in hybrids was the main reason why the German passenger car market slipped into negative territory in January. Dealers are particularly concerned about the shrinking share of the private market.
