The German Association of the Automotive Industry (VDA) expects a sharp decline in car sales this year. After a slump in May by almost half, the number of new car registrations fell in June by a third to 220,300 vehicles, the organization said. VDA boss Hildegard Müller forecast at the association's half-year press conference that the demand for the year as a whole is expected to drop by 23 percent to around 2.8 million vehicles. The way out of the crisis would be "long and rocky".

In the first half of the year, new car registrations in Germany alone dropped to 1.21 million units - the lowest figure since reunification. The picture is similar for exports, since the foreign markets have also shrunk considerably as a result of the Corona crisis. The European passenger car market declined by 43 percent in May, the US market by 23 percent and the Chinese car market by 27 percent. 

"The slump in the market is unprecedented in scale and global scale," said Müller, according to a VDA announcement.

Recovery depends on global infection events

The VDA expects a "slight recovery" for the second half of the year. For example, the drop in orders received was lower in June than in May compared to the same month in the previous year. The severe losses in the first two quarters will not be able to compensate for a strong recovery. According to the VDA forecast, the global market will decline by 17 percent to 65.9 million units in the full year. In 2019 there were 79.5 million.

This expectation is also optimistic, as it assumes that the coronavirus pandemic can be contained in other parts of the world as it has been in Europe. However, figures from the World Health Organization (WHO) show that the pandemic in Africa, Latin and North America is far from having reached its peak.

According to the VDA assessment, the commercial vehicle markets are being hit harder than cars. Worldwide sales will drop by a full 24 percent to 2.6 million units. The US market is particularly affected, where the decline will account for as much as 40 percent. Western Europe (minus 35 percent) and Germany (minus 29 percent) are also hard hit.

So far, the crisis has not had a fatal impact on the automaker's employees. The number of 814,000 employees at the end of April was almost three percent below the previous year's figure - however, half of the employees are currently on short-time work. In the long run, short-time workers, particularly those with small suppliers, are much more at risk of unemployment than other workers. The number of employees will decrease further by the end of the year, said VDA President Müller.

Sales of electric cars increase

According to Müller, the auto industry must not only overcome the crisis, but also use it as an opportunity to modernize. "In addition, the automotive industry is pushing ahead with its transformation for new drives and digitalization. These are enormous challenges." The manufacturers invested 50 billion euros in new drives and 25 billion euros in digitalization by 2024. The range of electric cars built by German manufacturers will double from 7o to more than 150 models in the next three years.

In fact, electric cars are the only vehicles that sell better in 2020 than last year - and clearly. According to the Association of International Motor Vehicle Manufacturers (VDIK), 90,000 electric vehicles were newly registered in Germany in the first half of the year, an increase of almost 90 percent compared to the previous year.

These include more than 43,000 cars with purely electric drives (plus 40 percent) and a good 47,000 plug-in hybrids (plus 190 percent). The federal government's stimulus package provides a purchase premium for electric cars, in contrast to combustion engines. However, the VDIK did not report whether the increase in their sales was affected by this or whether the effect was not yet noticeable.