Worldwide sales of passenger cars fell last year for the first time since their crisis-induced slump in 2008 and 2009. A further decline seems likely for the current year, according to the Bundesbank’s latest Monthly Report.

Passenger car sales are usually regarded as a reliable and rapidly available barometer for the economy as a whole. “The impression of the global economic situation given by worldwide car sales is, however, likely to be too negative at present,” write the Bundesbank’s economists. According to the Monthly Report, the current global weakness of passenger car sales is more a reflection of specific and, in some cases, temporary developments in regional markets.

As the Bundesbank’s economists see it, a major factor in this context in 2018 was the decline for the first time in the annual sales figures in China. Of particular importance was the reduction in tax breaks, which had been boosting car sales in previous years. Meanwhile, the slump in new passenger car registrations in the euro area was, by contrast, essentially due to temporary supply shortages, according to the Monthly Report. These were caused by delays in the certification of models following the introduction of the new EU-wide emissions test procedure.

Some markets largely saturated

The Bundesbank’s economists believe that special developments will continue to leave a clear mark on global sales figures in the coming months. First, in their view, the lowering of value added tax in China, which has been in effect since April, is likely to boost demand for new vehicles in the short term. Second, the United States is threatening to impose considerably higher tariffs on car imports in future. “Such a step is likely to put a perceptible damper not only on imports but also overall sales figures in the US,” write the economists.

Looking ahead, even if positive factors prevail in the short term, the Bundesbank thinks it unlikely that global car sales will be able to match their high rates of growth in the years from 2010 to 2017. Given the demographic outlook and the high degree of motorisation, the Bundesbank’s economists regard the markets in the advanced economies as largely saturated. According to the Monthly report, 2016 already saw them reaching much the same sales level as before the global financial crisis.

Focus on e-mobility

Fundamentally, the Bundesbank’s experts still see considerable potential for catching up in this regard. Not least on account of more stringent local environmental constraints and more frequent driving bans on cars with traditional internal combustion engines, however, sales growth in the Chinese market is, according to the Monthly Report, likely to focus on the e-mobility sector. Against the backdrop of these global underlying conditions, the authors expect the business environment to become more challenging in future for the German automobile industry.