German car sales drop sharply as demand for electric vehicles falls
(MENAFN) In August, new car sales in Germany, Europe's largest automobile market, experienced a notable decline, primarily driven by a record drop in demand for electric vehicles. According to data released by the Federal transport Authority (KBA), a total of 197,322 new cars were registered in the country last month, marking a significant decrease of 27.8 percent compared to the same period the previous year. This downturn reflects what the VDIK automobile importers' association described as a "historic decline" in battery-powered electric car sales, which fell by a staggering 68.8 percent to just over 27,000 units. The drop is partly attributable to the high sales figures in August 2023, when many buyers rushed to purchase electric vehicles before the expiration of certain government incentives.
However, the downward trend in electric vehicle sales has persisted throughout the year, exacerbated by the gradual phasing out of purchase incentives, which has posed challenges for car manufacturers who are also contending with stricter climate regulations and growing competition from international markets. EY analyst Konstantin Gall highlighted the weakening state of the electric vehicle sector in Germany, expressing little optimism for a significant rebound in the near future. He noted that many consumers currently favor traditional combustion engines when considering new car purchases, predicting that electric vehicle sales in Germany will be "significantly" lower this year compared to 2022 and 2023.
The waning demand for electric vehicles has raised broader concerns about the German automotive industry. In a surprising development, Volkswagen announced this week that it is considering closing some of its factories in Germany for the first time in response to the declining market conditions. Additionally, Audi, a Volkswagen subsidiary, had already indicated in July that it might shut down its plant in Brussels, which is dedicated to producing electric vehicles. Amidst these challenges, German Labor Minister Hubertus Heil pledged on Wednesday to introduce new government incentives to support electric vehicle purchases, aiming to bolster the sector amid its current difficulties.
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