Pit Stop for German Carmakers

15 July 2004

Carmakers in Germany, Europe's largest auto market, are facing a bumpy ride as the country's sluggish economy makes inroads into their European sales.

Latest figures released by the European Automobile Manufacturers Association show an overall 3.3% rise in sales across the continent, which translates into 7.8m new vehicles during the first half of this year.

The numbers are a cause for celebration among the Asian giants, including Korea's Hyundai and Japan's Toyota, which saw its market share in Western Europe climb to 5.1%.

However, DaimlerChrysler and, more worryingly, Volkswagen both saw sales slip, despite the revamp of some popular models.

VW, Europe's largest autonomous carmaker had been banking on the much vaunted restyle of its (until now) staggeringly successful Golf range.

But ten months down the track the wheels are wobbling as consumer spending and poor economic growth in Germany have led to speculation that VW's hoped for €2.5bn ($3.1bn, £1.6bn) operating profit for the year may be downsized.

Says Arndt Ellinghorst, an automotive analyst with Dresdner Kleinwort Wasserstein in Frankfurt: "One year ago, everyone was expecting VW to be the big market-share winner, and now it's flat."

General Motors has not fared much better with its re-modelled compact, Astra, also made in Germany at Opel. Sales for the first six months saw the company's Western Europe market share fall to 9.7%.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff