The German car market recovered slightly in the first half of the year.

From January to June, 1.47 million new cars were registered, 5.4 percent more than in the same period last year, according to the Federal Motor Transport Authority on Wednesday. The downturn in electric cars in particular is slowing down the overall market: registrations slumped by 16.4 percent in the first six months. This is due to the discontinuation of state subsidies at the end of last year. In addition, smaller, more affordable e-models are in short supply. According to experts, customers with purchasing power who are willing to contribute to climate protection have stocked up in recent years. The mass market should now follow suit, but is not making any progress.

"The discussion about the withdrawal of the ban on combustion engines in 2035 is further promoting this development and hindering the ramp-up of electromobility," explained Michael Lohscheller, President of the German Association of Automobile Importers (VDIK). The German government's target of 15 million electric cars by 2030 is receding further and further into the distance.

Compared to the year before the coronavirus crisis in 2019, the passenger car market in Germany was 20 percent lower over the course of the year, explained Constantin Gall, automotive expert at management consultancy EY. "It currently does not look as if the gap to pre-crisis levels can be closed in the medium term." A weak economy and consumers' loss of purchasing power due to inflation as well as uncertainty about e-cars are working against this.

The German Association of the Automotive Industry (VDA) cut its annual forecast for the production of purely battery-electric cars in Germany due to the weak demand: "While we were still expecting a production volume of 1.15 million units at the beginning of this year, we are now assuming domestic BEV production of 1.00 million vehicles." Accordingly, the VDA expects growth of only five percent compared to the previous year, down from 20 percent.

(Report by Ilona Wissenbach, edited by Ralf Banser. If you have any queries, please contact the editorial team at frankfurt.newsroom@thomsonreuters.com)