The global car market is declining at a rapid rate since the financial crisis

Market Expertz   |     December 30, 2019

 

As per the latest study, the global car market will have gone down faster this year at the height of the financial crisis, with around 3.5million fewer vehicles were anticipated to be sold than last year, as per the lobby group for the German automobile industry. The Association of the Automotive Industry (VDA) warned of further employment losses during the next one year, with an enduring downturn in China. Rapid development there supported the sector to recover from the global recession several years ago.
Last week, Volkswagen brand Audi and Mercedes-Benz parent Daimler axed approximately 25,000 roles in whole, citing the expenditure of investing in electric vehicles and decrease profits. Parts suppliers such as Bosch and Continental have also cut thousands of employees. “We have to expect a decrease in the size of the core workforce,” said Bernhard Mattes, the association’s outgoing president. Mr. Mattes also pointed out that provisional employment contracts were not being renewed and that the lobby had observed an increase in short-term work. Germany’s car sector directly employs around 850,000. The Center for Automotive Research at the University of Duisburg-Essen had projected that the market would not return to its 2017 year peak when 85.5 million vehicles were sold for at least another five years. “The conversion of the industry to electromobility will lead to job losses, which cannot be offset by growth in the coming years,” said CAR’s Ferdinand Dudenhöffer, who predicts that about 235,000 jobs are at risk in Germany over the next several years. Both the CAR and the VDA said the continued ambiguity caused by the US-China trade war, and to a minor extent, Brexit was adding to the German car sector’s problems, as was augmented competition from start-ups in Asia and the US.
“We see, therefore, that the path will be steep, rocky, and arduous,” said Mr. Mattes. “The competition will be harsher, the headwinds rougher.” The VDA president called on the German government to help by speeding up the installation of charging points for electric cars as well as by lowering the corporate tax rate, which is at present 32.5 percent. The VDA also said labor costs in Germany’s automotive industry were the maximum in the world, at an average of €55 an hour.