FRANKFURT, Germany, July 5 – Easing supply chain problems helped boost new car sales in Germany over the first half of 2023, official data showed Wednesday, but analysts said the recovery would likely stall in the face of high inflation and a weakening economy.
More than 1,396,000 new cars hit the road in Europe’s biggest economy over the first six months of the year, a 12.8-percent increase on a year earlier, according to the KBA federal transport authority.
Last month alone, sales surged by nearly a quarter compared with a particularly weak June 2022 when carmakers were struggling with a shortage of semiconductors. The lack of chips has since eased considerably.
The June increase was driven by a 31-percent jump in SUV sales, while demand for fully electric cars soared by more than 64 percent, the data showed.
Improved supply chains and full order books are likely to see “the upward trend continue at least until the end of the year”, said EY analyst Constantin Gall, who expects Germany’s new car market to grow by around 15 percent in 2023.
But beyond that, the outlook is murkier.
“High inflation, high prices for new cars, few attractive financing options and an uncertain economic situation” are all expected to weigh on demand, Gall said.
The end of electric car subsidies for company fleets from September 2023 will have a further dampening effect, Gall added.
Overall, the German new car market remains well below pre-pandemic levels.
Over the first half of 2023, new registrations were still 24 percent lower compared with the same period in 2019, before the pandemic disrupted the industry.
