Germany: where does car production stand?

Chart of the week

At the start of the month, Germany’s Automotive Industry Association (VDA) publishes the number of vehicles produced during the previous month. These figures cannot be directly compared with the production index published by the Federal Statistical Office because of differing methodologies, but they have the advantage of being available sooner and are generally a reliable indicator of industry trends (see below).

January’s numbers show that 367,300 vehicles were produced, compared with 296,000 in December. When the data is adjusted for seasonality, we estimate that January’s production rose 9% following two monthly falls and despite the strikes in Hungary.

Our analysis

According to the Federal Statistical Office, the introduction of new CO2 emission standards last September caused German car production to fall by 43% on an annualised basis in the third quarter of 2018. In the following quarter (Q4 2018), production recovered by 20% on an annualised basis and the increase in January’s figure suggests that the recovery continued at the start of this year.

That said, at 410,000 according to our estimations, the number of vehicles coming off the production lines in January was still about 10% below the average seen in the first half of 2018. As levels return to normal, German car production can be expected to buoy both domestic growth and that of the eurozone in the months ahead.

The opinion expressed above is dated February 6 2019, and liable to change

This document is not pre-contractual or contractual in nature. It is provided for information purposes. The analyses and descriptions contained in this document shall not be interpreted as being advice or recommendations on the part of Lazard Frères Gestion SAS. This document does not constitute an offer or invitation to purchase or sell, nor an encouragement to invest. This document is the intellectual property of Lazard Frères Gestion SAS.

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Julien-Pierre Nouen

Directeur des études économiques et de la gestion diversifiée