Berlin ready for 585 million incentives for electric cars. VW: 'Two years to change course'

The car market in Germany collapsed in August compared to the same period last year. According to the Federal Motor Transport Authority, there were 197,000 registrations, almost 28 per cent fewer.

Sharp decline in purely electric cars: only 27,000 new cars sold, down 69% year-on-year. August 2023 was a special month, however, with a very high number of registrations. The following month, September 2023, the incentives for company cars would be discontinued and purchases were therefore brought forward. The rush increased new registrations overall before the end of the year by more than a third.

The ruling coalition had been forced to abolish some incentives following a surprise ruling by the Constitutional Court, which messed up budget planning and forced a significant reduction in spending.

However, the comparison with a particular month like August 2023 does not explain everything. Demand in general, and that for electric cars in particular, is weaker. Green' cars accounted for only 13.7 per cent of the registered fleet last month, compared to an average of 18 per cent in 2023.

The declines affected all fuel types: hybrids, which accounted for 35.1% of the total, dropped 1.5%, petrol (35.5% of the total) 7.4% and diesel (15.2%) 24.4%. All brands recorded minus signs: -23.3% Volkswagen, -15.5% Mercedes, -23% Bmw, -36.6% Audi, -17.1% Opel, -44.6% Mini and -77.9% Smart.

The German automotive industry has an increasingly pessimistic view of the current economic situation and future development.

The Ifo business climate index for the industry dropped by almost six points to minus 24.7 points in August. 'The mood in the automotive industry is in a nosedive,' said Anita Wölfl of the Ifo institute.

Emblematic is the troubled situation of the iconic German industrial group, which is grappling with a heavy restructuring and cost-cutting plan: ten billion euros by 2026. Three are still missing. Volkswagen has made it known that it might close at least one plant in Germany, something that has never happened in its 87-year history.

On Wednesday, 4 September, the managers met with employees at the Wolfsburg headquarters, with the unions already announcing battle.

The financial director, Arno Antlitz, defended the group's choices. Demand in Europe has not recovered after the Covid 19 pandemic. Volkswagen alone lost sales of about '500,000 cars, the equivalent of about two plants, we have a year, maybe two' to change course, he said.

Last year, Volkswagen produced around 9 million vehicles, against a total capacity of 14 million.