Since Germany played a significant part in establishing the global motor industry in the late 19th century, perhaps we should not be surprised that the industry is thriving today and that German motor manufacturers continue to outperform the market trends in Europe. It usually follows that countries with a strong automotive manufacturing sector do not provide many opportunities for motor vehicle importers and that seems to be true of Germany.

Data available from the International Organisation of Motor Vehicle Manufacturers (OICA) suggests that in 2011 6,311,318 motor vehicles were manufactured in Germany, consisting of 5,871,918 passenger cars and 439,400 commercial vehicles, representing a 6.9% increase compared with 2010. OICA data rates Germany as the fourth largest motor vehicle manufacturer in the world.

According to data from the European Automobile Manufacturers’ Association (ACEA), in 2010, Germany had 47 vehicle and engine assembly plants, compared with 38 in France and 32 in the UK, although if press reports are correct, Germany stands to lose the GM plant at Bochum, following the announcement that the next generation Opel/Vauxhall Astra will be built at the company’s Ellesmere Port plant in the UK.

Besides the major German car manufacturers: Audi, BMW, Mercedes-Benz, Porsche and Volkswagen, Mercedes-Benz and Munich-based MAN also produce trucks and buses. The only large foreign manufacturers building vehicles in Germany are Fiat, Ford, General Motors and Volvo Trucks. Fiat is represented through its Iveco heavy truck subsidiary, which builds Magirus heavy truck and fire-fighting vehicles. Magirus was a German heavy truck maker, bought by Fiat when Iveco was established in the 1970s.

Both General Motors and Ford are regarded as German manufacturers in Germany since both have had manufacturing operations in the country for many years. Ford set up vehicle assembly in Germany in 1925 and GM acquired Opel in 1931.

The registration growth seen in 2011 appears to be continuing in 2012, if at a reduced rate of growth. 3,173,634 passenger cars were registered in Germany in 2011, 8.8% more than in 2010. In the period January to April 2012, data from ACEA shows that 1,047,702 new cars were registered in Germany, 1.8% more than for the same period in 2011. Registrations for April, at 274,066 were 2.8% higher than for April 2011, against an average 6.9% decline for the EU27 countries. The average decline for January to April 2012 was 7.5%.

For commercial vehicles, the German International Association of Vehicle Manufacturers (VDIK) suggests that Germany is bucking the trend in CV registrations. With over 26,000 registrations, the market was down 1% in April, with heavy commercial vehicles up 7% to 6,000 compared with the downward trend across Europe. Compared with 2011 the January to April period recorded 102,000 new CV registrations in Germany, down approximately 1%. Again this is a better performance than the European average, with EU27 Q1 new CV registrations down 9.6%.

Despite the relative strength of the German economy, German drivers have been no more immune to emissions pressures and rising fuel prices than any other EU member states, and downsizing has been the trend amongst drivers. According to JATO Dynamics: “The most significant growth can be found in the Medium SUV segment with models like the Volkswagen Tiguan, Skoda Yeti, AUDI Q5, Mercedes GLK from German manufacturers as well as models like Dacia Duster, Hyundai ix35 and Kia Sportage from import brands, which have more than doubled in volume in the past five years. These models combine low CO2 and comparatively low fuel consumption with customers appreciating features such as higher seating position, more passenger and luggage space and the ‘sporty outdoor’ image attached to the segment. This trend has come at the expense of Luxury SUVs and small and Medium MPVs, as sales volumes have dropped significantly for these models over time.”

JATO also points to growth in the A-segment. Growth for the sector, with models such as the Fiat 500, Ford Ka and Hyundai i10, has been 12% since 2007. Growth in 2009 was 106%, but much of this can be accounted for by the German scrappage scheme. But the arrival of the VW Up! and its cousins the Skoda Citigo and Seat Mii, is likely to stimulate sales in the segment this year.

Not surprisingly, the lower-medium segment is another strong performer, since the VW Golf is the best selling car in Europe. Besides the Golf, the Opel Astra and Ford Focus are strong performers in the sector with the Renault Megane, Peugeot 308, Hyundai i30 and Kia cee’d also performing well. According to JATO, the segment has grown by almost a fifth since 2007 and now accounts for 15.7% of the new car market in Germany. Business sales in this sector are also buoyant.

Altogether, German manufacturers account for around 45% of the new car market, although JATO points to significant differences in performance. While VW has experienced growth of nearly 13% between 2007 and 2011, Mercedes has seen volumes fall by a similar amount. Similarly Opel market share has dropped from 9.1 to 8.0% while Ford’s has increased from 6.8 to 7.3%.

For imported brands, Hyundai has risen from the 15th best selling brand to ninth between 2007 and 2011, while Toyota has moved down from 7th to 11th. At the same time the Toyota Auris has been displaced as the best selling import by the Hyundai i30.

German business car drivers may be looked upon with a degree of envy by their counterparts in other countries. A flat-rate tax of 1% of the gross list price is levied for private use. Vehicle tax has been partially linked to carbon dioxide emissions and cylinder capacity since 2009. German drivers must also pay for a car radio licence to receive public broadcast services while radio and navigation systems must also be licensed for business use, even if they are not used.

According to LeasePlan, 80% of the company car market is accounted for by Audi, BMW, Ford, Mercedes-Benz, Opel and VW. Some 60% of company cars are financed by leasing, says LeasPlan, with a significantly higher proportion of leasing in large fleets. “Generally it can be said that, the bigger a company is, the more leasing as a financing method is preferred. The full-service-leasing share for big fleets is about 75%,” reckons LeasePlan and adds, “The future trend for leasing is increasing, also because the share of leased company cars in the small fleet segment will be increasing in the years to come.”

That said, JATO reckons that Germany is still some way behind the UK and Netherlands in terms of contract hire and leasing shares, “Due to the low interest rates, cash-rich companies are considering outright purchase again with the fleet management part often being outsourced to specialists,” says JATO.

Both LeasePlan and ALD point to low take up for electric vehicles at the moment. Factors affecting this include the small number of available models from German manufacturers, limited range and the small network of vehicle charging points for electric vehicles. Even so, the White Clarke Group Asset Finance Survey for Germany sees EVs as a growth area for the leasing sector. Overall German car leasing business in 2011 grew by 12%.

It is low emissions models that tend to be fleet favourites. “Every second customer of LeasePlan Germany has green elements implemented in his or her car policy,” says LeasePlan, “To influence the company car drivers' choice positively, companies tend more and more to apply ‘bonus-malus’ systems which employ CO2 emission caps. This way the company car driver benefits financially from an environmentally friendly choice. On the other hand the driver has to make an out-of-pocket payment, if he insists on driving a non-environmentally friendly model. There are also companies that rule out high- emission models right from the start. For fleet managers, low-emission is a synonym for low-cost due to the fact that 30% of the total costs of ownership consist of fuel.”

Viewpoint: the leasing industry

ALD highlights the strength of the used car market in Germany: ”A lot of cars are being transferred from other markets to Germany for re-marketing now,” says Karsten Rösel (below), general manager, ALD Automotive Germany.

”That’s an effect here that leasing companies have to deal with, so there is over-supply of the typical leasing returns. Besides all the positive dynamism, we see a drastic increase in dealer and manufacturer registrations,” he continues. This introduces what Mr Rösel refers to as ‘artificial market dynamism’.

”The dealers register a lot of cars and newly leased cars are then being marketed quickly after registration for decreased pricing.” This could be a way of dealing with models that are not selling in crisis-hit economies like Spain and Greece, or for models that are coming towards the end of their life cycle. Instead of selling them at large discounts, manufacturers prefer to offer low leasing rates. The Autorola report on Portugal opposite also discusses this pan-European marketing trend.