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German car sales spike as ‘dieselgate’ effect fades

German car sales enjoyed a strong surge in September, official data showed Wednesday, although the rise was largely attributable to a statistical effect that had weighed on registrations in late 2018.

Published: 2 October 2019 15:31 CEST

German car sales spike as 'dieselgate' effect fades

A traffic jam near Munich in July. Photo: DPA

Last month, a total 244,622 vehicles hit the roads, 22.2 percent more than
in September 2018, the KBA transport authority said in a statement.

Growth has been more modest over the year to date, adding 2.5 percent to reach 2.74 million vehicles between January and September.

Over that period, “a higher figure was last achieved in the year 2009,” the VDA industry federation commented in a statement.

The German data therefore mark a bright spot in an industry battling falling demand worldwide.

Dieselgate woes

Last year in September, German sales had been hit when the European Union
introduced new air pollution tests known as WLTP in response to the “dieselgate” emissions cheating scandal.

READ ALSO: Five things to know about Germany's dieselgate scandal

Some manufacturers encountered bottlenecks in the certification process,
squeezing sales in the autumn months.

The registrations in September 2018 “showed an unusually low level due to
the transition to the WLTP test procedure,” the VDA confirmed.

Looking to different manufacturers, giant Volkswagen has so far this year
accounted for 18.2 percent of the German market with sales of almost 500,000
units.

Among the high-end carmakers, BMW booked a 7.4-percent share with sales of
202,500 vehicles, while Mercedes-Benz reached 9.1 percent at almost 250,000
cars and VW subsidiary Audi's market share was 7.8 percent with 214,000.

The dieselgate scandal continues to cast a long shadow, with the share of new cars powered by the fuel just below 30 percent in September.

Petrol cars accounted for almost 60 percent, while electrics reached 2.4 percent and hybrids 7.7 percent.

READ ALSO: Frankfurt car show faces protests over SUVs and climate woes

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How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year.

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’, Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn.

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment?

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024 about 1 percent below the estimated structural level.

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending?

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”. The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”.

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025.

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023.

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write.

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers.

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.”

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