April figures show that the German passenger car market grew by 6.3% year on year (y/y) to 291,395 units, boosting the year-to-date (YTD) figures.

In response, IHS Automotive Principal Analyst, Ian Fletcher said: “Despite the slower rate of growth in April than in previous months, the upward trajectory of the market is continuing. This coincides with the German economy's return to a recovery path since late 2014 despite restraining influences related to geopolitical crises in Ukraine and the Middle East, as well as the ramifications of the Eurozone sovereign debt crisis and associated European banking-sector risks. After a mid-2014 pause in GDP growth, it surged to an unexpectedly strong 0.7% quarter on quarter (q/q), or 2.8% in annualised terms, in the fourth quarter of 2014.”

He added: “Although this probably overstates matters in underlying terms, convincing rebounds in leading indicators signal a sustained recovery. Such optimism is underpinned by the German economy's ongoing high degree of international competitiveness and persistently robust consumer demand resulting from supportive developments in real income and the labour market. The latter is being enhanced by the boost to purchasing power coming from significant oil price declines since mid-2014. Meanwhile, lower oil prices also provide cost relief for businesses, in addition to which the marked weakening of the euro in recent months – a trend that was extended even further during March – is increasingly helping exports.

“IHS's latest forecast predicts that German GDP growth will strengthen from 1.6% in 2014 to 2.1% in 2015 and 2.2% in 2016.

“Nevertheless, despite these positive economic factors, passenger car demand in Germany will also continue to be fuelled by high levels of discounting and incentives as OEMs jockey for position and volumes. New models will also help lift the market. This has already been apparent with the launches of the heavily updated Opel Corsa and new VW Passat and Mercedes C-Class. More are coming, including the new Audi A4 and second-generation VW Tiguan. Forthcoming revisions to the BMW 3-Series range should also boost this perennial favourite's popularity as it competes against newly replaced rival models. For the full year 2015, IHS Automotive sees passenger car sales in Germany rising by 3.3% y/y to 3.14 million units, which implies a slowdown from the current rate of growth over the rest of the year.”