A weaker development in Germany dampened the recovery of the European new car market last year. In the European Union (EU), there were 10.5 million cars on the road in 2023, almost 14 percent more new cars than in the previous year, as the manufacturers’ association ACEA announced on Thursday. However, the pre-crisis level is still a long way off and a quick recovery is not in sight.
“The bottom line is that 2024 is likely to be a difficult year for the automotive industry,” said Constantin M. Gall, an expert at the auditing firm EY. The emerging discount battle, which is increasingly reaching the electric segment, will also squeeze car manufacturers’ margins. “The good news for potential car buyers, however, is that new cars are becoming cheaper again and the seller’s market has become a buyer’s market.”
According to ACEA data, the major markets increased France, Italy and Spain 2023 by 16 to 19 percent, while heavyweight Germany only recorded an increase of 7.3 percent. The record level of 2019, the year before the corona pandemic, when 15.3 million new cars were registered, is still a long way away. In addition, a decline was recorded in December for the first time in 16 months; Overall, 867,052 vehicles were sold, 3.3 percent fewer than a year ago. A significant decline in Germany played a particularly important role: almost a quarter fewer vehicles were sold in the Federal Republic.
Stopping the environmental bonus is slowing down the German market
The capriciousness surrounding electric car subsidies was the reason for the weak performance of the German market. Due to the abolition of subsidies for commercial customers, new registrations of battery-electric cars fell by 47.6 percent in December. This was also due to a base effect, as a year ago many buyers had bought electric cars in anticipation of falling subsidies. Plug-in hybrids also suffered from the withdrawal of government funding.
“The end of the environmental bonus was a hard blow for the German electric car market and will lead to weaker demand,” said EY expert Gall. In other European markets, it can be observed that government funding makes a significant contribution to the market ramp-up – where there is no funding, demand remains manageable. “The goal of having around 15 million electric cars on Germany’s roads by 2030 is now a long way off – given the new framework conditions, many new car buyers are now likely to opt for a combustion engine instead of opting for an electric car.”
The number of new electric cars in the EU rose by 37 percent to 1.54 million. The market share climbed to 14.6 percent. However, the differences between the countries are large: While in Scandinavia more than one in three new cars is electrically powered, the proportion in Eastern Europe is marginal. “The ambitious EU plans for electromobility, according to which no new combustion engines will be registered from 2035, are so far removed from today’s reality in parts of Europe that one has to be very worried about their feasibility,” said Gall. This poses difficulties for the industry, which relies on clear framework conditions and planning security.
Gasoline engines account for the largest share of new cars at 35.3 percent. Sales increased by a good ten percent to 3.7 million units last year. The second largest type of drive is integrated hybrids (25.8 percent), while externally chargeable plug-in hybrids only account for 7.7 percent. Diesel vehicles are in less and less demand; their market share has shrunk by almost three percentage points to 13.6 percent. Among the car companies built Volkswagen In 2023, its market leadership will increase slightly to 26 percent market share, followed by Opel-Mother Stellantis (18 percent) and the Renault Group (eleven percent).