The German car market is off to a bumpy start in 2023, with new electric vehicle registrations in particular having plummeted. Data from the International Energy Agency (IEA) indicates that new electric car registrations are expected to decline even further over the next three years. This will have serious repercussions for the entire automotive industry, as demand for both conventional and electric vehicles is expected to decrease in the near future.
The car market has had a weak start to the 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 environmentally friendly transportation. The study indicates that this decline in registrations is due to a lack of consumer acceptance and poor battery technology.
The German car market experienced 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 decrease of 2.6 percent 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 KBA recorded only 179,247 newly registered passenger cars, which is around 2.6 percent less than in the same month of the previous year and the second-lowest level for the winter month since 1991.
Electronic car market collapses massively
At the beginning of the year, electric vehicles were experiencing a steep downward trend. In January, around 27,000 new electric cars and plug-in hybrids were registered, representing a decrease of 32 percent. The number of battery 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). This trend in the sales of conventional cars 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 for plug-in hybrids have fallen drastically, by 53.2% to 8,900 vehicles. These vehicles have no longer been eligible for subsidies since the beginning of the year. The KBA (German Federal Motor Transport Authority) also reported 18,100 new registrations of battery-powered vehicles (-13.2%).
The share of plug-in hybrid vehicles in the overall market fell to 15 percent in January. However, it averaged 31 percent for the entire year of 2022, and in December 2022 it was significantly more than half that figure. On the other hand, more new passenger cars had combustion engines again in January. The share of diesel vehicles was 21.9 percent, and that of gasoline vehicles was 39 percent.
“The declines in electric vehicles were to be expected, as all cars where this was possible were registered in the final sprint of 2022 in order to take advantage of the higher subsidies,” explained ZDK Vice President Thomas Peckruhn, spokesman for the automotive trade in Germany.
The slump in PHEV sales is also attributable to the expiration of subsidies on January 1st, and even with battery-powered cars, customers are showing greater reluctance due to the reduced purchase premium. Added to this is the shortage of available vehicles.
The decline in the private market is causing concern among traders
Dealers are also deeply concerned about the overall significant decline in new private vehicle registrations. The number of passenger cars newly registered to private individuals fell by 12.1 percent in January to 56,700 units, representing a share of 31.6 percent. This continues a trend that began in the third quarter of last year with declining order intake, according to Peckruhn.
Electromobility must not become a kind of mobility for the wealthy
“Politics and industry will have to come up with something,” warned Peter Fuß, automotive expert and partner at EY Consulting, cautioning that electromobility could become a mode of transport that the majority of 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 premium electric vehicle segment will continue to boom – the purchase premium plays no role here anyway,” Fuß added.
In his estimation, plug-in hybrids will only be attractive for company cars. Even though the purchase incentive has been eliminated, the tax advantage for company cars remains. Looking at the overall market, Fuß predicts only a slight increase in new car sales in Germany for 2023.
In his estimation, plug-in hybrids will only be attractive as company cars, since although the government purchase incentive has been abolished, the tax advantage for company cars has been retained. Fuß expects single-digit growth in new car sales in Germany for the overall market in 2023.
Brand manufacturers BMW and Opel suffer significant sales losses
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 (Federal Motor Transport Authority). 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 revenue loss of approximately 1 percent.
Among the major brands (with a market share of two percent or more), Tesla recorded the largest percentage increase at +912.2%. Dacia, Toyota, and Skoda also saw double-digit growth of 42.1%, 28.3%, and 12.6%, respectively. Conversely, Seat and Renault experienced significant declines of 38.8% and 36.2%. Hyundai recorded a decrease of 6.9%, and Fiat a decrease of 3.4%.
The automotive industry is particularly concerned about the massive decline in registrations in the private passenger car market. Peckruhn emphasized that this continues a trend that began in the third quarter of last year, when orders fell and market share declined: "With the changed subsidy conditions, the federal government has done a disservice to its self-proclaimed goal of a strong ramp-up of e-mobility." Customers, but also dealers, need reliable framework conditions, "otherwise the targeted registration volumes cannot be achieved.".
After reaching a peak in December, 2023 brought disappointment: The lack of new registrations of 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.
