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German carmakers beat global sales slump amid job cut woes

German car giants Volkswagen, BMW and Daimler have posted strong sales growth in the face of a contracting global market in 2019, shifting massive numbers of SUVs ahead of a pivotal year for electric mobility.

German carmakers beat global sales slump amid job cut woes
A Mercedes Benz employee at a factory in Bremen. Photo: DPA

While ratings agency Fitch estimated global unit sales shrank four percent year-on-year, figures released in recent days showed BMW gaining two percent, Daimler's Mercedes-Benz 1.3 percent, and the 12-brand VW group flagship brand 1.3.

But even with growing sales, carmakers plan over 40,000 jobs cuts in the coming years, with Opel the latest to announce 2,100 voluntary departures Tuesday.

“German manufacturers are well positioned with their premium brands,” said Ferdinand Dudenhöffer, industry expert at the University of Duisburg-Essen.

In the fierce race to be worldwide number one in high-end cars, Daimler's nose remained ahead for the fourth year in a row.

The Stuttgarters shipped 2.34 million Mercedes-Benz, while Munich sold 2.17 million BMWs – both all-time records.

Both premium manufacturers' figures were massively boosted by China, with Mercedes sales there growing 6.2 percent and BMW 13.1 percent year-on-year.

But VW also highlighted strong performance in China “thanks to the strength of its brand,” Dudenhöffer said.

More keenly touched by the US-China trade conflict were American manufacturers like Ford and General Motors, he added.

READ ALSO: Rise of e-mobility in Germany puts more than 400,000 jobs at risk

Gas guzzlers

For all the German carmakers, 2019  brought new strides for the dominance of SUVs in sales figures.

Sales of BMW's “X” range grew 21 percent, now making up around half of total deliveries.

At Daimler, one in three Mercedes sold was an SUV at almost 784,000 units, while VW's Seat and Porsche subsidiaries also shipped more of the models.

“It's perfectly clear that SUVs drive sales and profits for the carmakers,” said Stefan Bratzel of the Center of Automotive Management.

But demand for the high-margin gas guzzlers will squeeze manufacturers as they scramble to reduce carbon dioxide (CO2) emissions in response to new EU rules.

From this year, automakers must reach average CO2 emissions across their new vehicle fleets of below 95 grammes per kilometre, on pain of harsh fines from 2021.

READ ALSO: How Germany is preparing for the rise of the electric car

“Electric cars have to hit the roads, otherwise the fines will land and they will be painful,” Dudenhoeffer said.

Electric avenue

Looking to reduce their climate impact, manufacturers have dozens of electric and hybrid models lined up for release in the coming years.

In particular focus is Volkswagen's “ID.3” compact car, presented to great fanfare at last September's IAA trade show as the electric counterpart to the company's stalwart Golf.

Meanwhile BMW and Daimler are placing most of their chips on hybrids rather than all-electric power.

“The manufacturers can't leave SUVs by the wayside,” Bratzel said. “Rather, they'll try to give them a coat of green paint” to overcome their negative image.

With many drivers still reluctant to take the electric plunge, “demand will depend in the long term on charging infrastructure” to reassure the doubters.

Charging points also represent one factor for carmakers' success not completely under their control, Bratzel pointed out.

But they are fundamental to plans – like VW's aim of selling 26 million electric vehicles and six million hybrids by 2029.

Even if the targets are met, far fewer workers are needed to assemble an electric than an internal combustion vehicle, and cash is needed for research and development spending.

That points to “a second major challenge” on the jobs front for the pillar of German industry, Dudenhöffer warned.

READ ALSO: Germany sees a significant rise in SUVs on roads

By Yann Schreiber

 

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WORKING IN GERMANY

7 tips for how to survive as a freelancer in Germany

Taking the decision to go it alone and freelance in Germany can be a daunting prospect. But, if you do it right, it can be an exciting and liberating path. Here are some of our top tips on how to survive.

7 tips for how to survive as a freelancer in Germany

1. Get a tax advisor

The German tax system is complicated, even for Germans. All the associated paperwork uses the Amtsprache (authority language) which is more like legalese than ‘normal’ German, and mistakes when filling out tax forms can cause you, at best, a massive headache and, at worst, a costly fine. So it’s best that you employ someone who knows what they’re doing to help you out.

That person is called a Steuerberater (tax advisor) in Germany. They will help you register with the tax office, correspond with them and submit your tax declarations.

Be aware that, in Germany, different deadlines apply for tax returns depending on whether you employ an official tax advisor or not. If you are doing the tax return on your own, the deadline for submitting your annual tax return is earlier than if you use a tax advisor’s services. 

READ ALSO: What NOT to do when you’re freelancing in Germany

When looking for a tax advisor, a top tip is to use your network to get recommendations. Ideally, you want someone who will do more than just fill in the forms for you, but who will actually advise you on how best to manage your business finances so that you can make tax savings.

2. Keep your accounting in order

The better you keep your own accounts in order, the easier it will be for your tax advisor to compile your tax declarations and therefore the cheaper their services will be.

As a freelancer, there are a lot of costs you can deduct from your taxes – from train tickets, working materials, to meals out – so it’s best to keep hold of all your receipts and to keep them in good order.

2 euros and 50 cents lie on a receipt in a beer garden. Photo: picture alliance/dpa | Peter Kneffel

In Germany, you’re obliged to keep hold of receipts for two years, in case of a tax inspection, so it’s a good idea to photocopy the type of machine-printed receipts you get from restaurants so that they stay legible for a long time.

There are also a few things to be aware of when writing your own invoices. Firstly, make sure that you include your tax number. This isn’t the 11-digit Steueridentifikationsnummer that everyone gets when registering in Germany, but the 10-digit Steuernummer you get from the Finanzamt after registering yourself as a freelancer. 

Most companies won’t pay you if you don’t have this on your invoices so make sure you include it.

You should also make sure that you number your invoices properly – ideally in ascending order so that you can easily keep track of them. You are not allowed to issue two invoices with the same number and if you do so and the finance office notices, you could face an inspection of your whole accounting system.

There are numerous great accounting software programmes you can use to help you, such as Lexoffice and Sevdesk and, even if you have to pay for them, the costs will be tax deductible!

3. Find out if you’re eligible for financial support

In Germany, there are several opportunities for freelancers to gain financial support and to cut their outgoings, and its worth finding out if you’re eligible for them.

If you’re claiming unemployment benefits under ALG 1 and are thinking about becoming a freelancer, the employment office offers a special type of financial support to help you to get your freelance business off the ground.

Called the Grundungszuschuss (“foundation grant”) the payment is a six-month grant equalling your monthly entitlement under ALG 1 plus €300 towards your insurance costs can be applied for those in receipt of this unemployment benefit.

READ ALSO: Will freelancers benefit from Germany’s €300 energy allowance?

If you are engaged in some form of artistic profession in Germany – which can include journalism to pottery – you may be entitled to membership to the Kunstlersozialkasse (artists’ social insurance).

Being a member of the KSK means you only have to pay half of your health insurance and pension contributions, and the KSK will pay the rest.

4. Work out how much you think you will earn

As with starting any business, you need to have some idea of your expected earnings from the outset.

If you’re just starting out as a freelancer, or have some freelance gigs on the side of an employment position, then it might be worth considering registering yourself as a Kleinunternehmer (“small business”).

As a Kleinunternehmer, you can currently earn up to €22.000 per year without having to charge VAT and having to submit only yearly tax declarations. 

An income tax declaration form lies on a table. Photo: picture alliance/dpa/dpa-Zentralbild | Hans-Jürgen Wiedl

Be aware that if you are registered as this kind of freelancer, you must include the following sentence in your invoices: ‘Gemäß § 19 UStG wird keine Umsatzsteuer berechnet’ which means ‘In accordance with Paragrah19 of the German VAT law, no VAT has been added to this invoice.’

READ ALSO: Everything you need to know about your German tax return in 2022

If you think you will earn more than €22.000 per year, you will need to pay Umsatzsteuer (VAT) and will have to submit tax declarations in advance and more often. Depending on how much you earn, this could be every month or every quarter. 

5. Get your insurance in order

In Germany, it’s a legal requirement to have health insurance.

If you’ve just made the move from employment to being a freelancer and want to keep the same health insurer, you should get in contact with your health insurance provider straight away to tell them about your change of circumstances. They will ask you to re-register and to tell them your projected freelance earnings for the year, so they can amend your monthly fees.

If you don’t keep your health insurer provider updated, you could continue to be charged the higher rate that you had from your previous salary.

The insurance cards of the health insurance companies DAK, AOK, Barmer and Techniker-Krankenkasse TK lie with euro notes under a stethoscope. Photo: picture alliance / dpa | Daniel Karmann

It’s not just health insurance you need to think about as a freelancer. It’s also wise to think about protecting yourself from any sort of claims that could arise as a result of any working mishaps. 

If, for example, you lose your laptop which contains confidential client information, you need to be protected against claims.

That’s why it’s good to have both Betriebshaftversicherung (business liability insurance) and Rechtschutzversicherung (legal protection insurance).

6. Plan your time wisely

All of these bureaucratic obligations take time. So it’s really important that you take account of that when planning your time. For example, planning half a day a week to deal with your invoices, filing, emails to clients, and conversations with authorities can be really beneficial when scheduling your working time. 

7. Grow your network

As a freelancer, networking is absolutely crucial to success. 

Keep an up-to-date profile on websites like LinkedIn and German equivalent XING and keep in contact with anyone you’ve ever worked with, no matter how brief the contact was. 

Having a network is not only about getting more clients, but also about building a support network in your field to exchange advice, tips and generally for your own enrichment. 

Participating in workshops related to your field, going to seminars, and meet-ups, can be great ways of broadening your network. 

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