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September 22, 2017
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German carmakers have recently lost market share in Western Europe and the USA, also – but not exclusively – due to the diesel debate. In China, the market share of German carmakers picked up again in the first half of 2017 vis-à-vis the preceding two years. Overall, chances are good the German automotive industry can in future at least maintain its position in the key global auto markets. [more]
PROD0000000000452093 1   |    September 22, 2017Talking Point September 22, 2017 German carmakers are losing market share of late – albeit not everywhere Author www.dbresearch.com Deutsche Bank Research Management Stefan Schneider Eric Heymann +49(69)910-31730 eric.heymann@db.com German carmakers have recently lost market share in Western Europe and the USA, also – but not exclusively – due to the diesel debate. In China, the market share of German carmakers picked up again in the first half of 2017 vis-à-vis the preceding two years. Overall, chances are good the German automotive industry can in future at least maintain its position in the key global auto markets. Recently, the German automotive industry is producing good as well as bad news. On the one hand, excessive emissions of many diesel cars have severely damaged the image of the industry. On the other hand, the vast majority of companies reported solid financial results. The IAA is also a mixed bag, showcasing high horsepower SUVs and sports cars, whilst, at the same time, companies are announcing an alternative fuel model offensive for the years ahead. Moreover, the shares of German automakers in the three key car markets (China, USA, Western Europe), also painted a mixed picture in recent years. In this respect, it is worthwhile to distinguish between the long term and the short term. On a long-term horizon, German carmakers (group brands) expanded their shares in all three markets. At the current margin (H1 2017), they are up on the level of 2005, in part sharply. The share in China, for instance, recently came to 20.8%, which marks an increase of roughly 4 pp on 2005. On the short-term horizon, however, the picture is less (clearly) positive. In the first half of 2017, the share in all three markets was down from its respective peak. In the US, it has been declining fairly steadily since 2012 by a total of around 1 pp to 7.6%. The diesel scandal and the resulting damage to the image ought to have been a contributing factor, at least from 2015 onwards, even though diesel plays only a subordinate role in fuelling light vehicles in the US. Another reason why German group brands lost market share in the US is that light vehicle sales are increasingly driven by the segment of light trucks in recent years, which are particularly voluminous by European standards. German carmakers, however, are better positioned in the second segment, traditional passenger cars. In China, the market share of German group brands in the first half of 2017 was down by 0.6% pp from its peak in 2014, but this marks an improvement vis-à-vis 2015 and 2016. Recent volatility can in part probably be ascribed to the model Deutsche Bank Research German carmakers are losing market share of late – albeit not everywhere 2   |    September 22, 2017Talking Point © Copyright 2017. Deutsche Bank AG, Deutsche Bank Research, 60262 Frankfurt am Main, Germany. All rights reserved. When quoting please cite “Deutsche Bank Research”. The above information does not constitute the provision of investment, legal or tax advice. Any views expressed reflect the current views of the author, which do not necessarily correspond to the opinions of Deutsche Bank AG or its affiliates. Opinions expressed may change without notice. Opinions expressed may differ from views set out in other documents, including research, published by Deutsche Bank. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the information given or the assessments made. In Germany this information is approved and/or communicated by Deutsche Bank AG Frankfurt, licensed to carry on banking business and to provide financial services under the supervision of the European Central Bank (ECB) and the German Federal Financial Supervisory Authority (BaFin). In the United Kingdom this information is approved and/or communicated by Deutsche Bank AG, London Branch, a member of the London Stock Exchange, authorized by UK’s Prudential Regulation Authority (PRA) and subject to limited regulation by the UK’s Financial Conduct Authority (FCA) (under number 150018) and by the PRA. This information is distributed in Hong Kong by Deutsche Bank AG, Hong Kong Branch, in Korea by Deutsche Securities Korea cycle. Moreover, a tax cut on vehicles with relatively small engines favoured domestic carmakers in 2015 and 2016. In China, as well, diesel plays no role as a fuel for passenger cars. In Western Europe, the world’s largest diesel passenger car market, German automakers had a market share of 48.2% in the first half of 2017; which marks a decline of 2.3 pp compared with 2014, the record year to date. It is highly plausible that the decline stems from the diesel debate, the more so as VW Group suffered above-average losses, whereas other carmakers reported increases. But for Western Europe, like for the other markets, it holds that the evolution of market shares – now and in future – cannot be boiled down to a monocausal explanation. Overall, chances are good the German automotive industry can in future at least maintain its position in the key global auto markets. Accusations frequently voiced by some media, politicians and NGOs that German carmakers have slept through technological trends such as electromobility (or autonomous driving) are simply false generalisations. In any case, alternative fuels continue to be a niche market and predominantly obtain higher market shares only if they are subsidised. Carmakers relying on a generous subsidy regime for electric cars, however, are facing regulatory and economic risks. In the years ahead, the technological progress will help to improve the price competitiveness of electric and hybrid cars vis-à-vis cars with conventional combustion engines. Moreover, market penetration of alternative fuels is likely to rise, courtesy of regulatory standards such as CO2 ceilings for passenger cars. But at the end of the day, the customer decides which car he wants to buy. And in the past, the German automotive industry was good at understanding the tastes of consumers, even though some (ecologically-oriented) market watchers steadily raise the question as to whether SUVs, off-road vehicles or powerful high-end vehicles really make sense.   Deutsche Bank Research German carmakers are losing market share of late – albeit not everywhere 3   |    September 22, 2017Talking Point Co. and in Singapore by Deutsche Bank AG, Singapore Branch. In Japan this information is approved and/or distributed by Deutsche Securities Inc. In Australia, retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product referred to in this report and consider the PDS before making any decision about whether to acquire the product.