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Meet the auto industry winners and losers for 2023.
Meet the auto industry winners and losers for 2023.

Meet the auto industry winners and losers for 2023.

The supply of cars in 2023 is likely to be higher. The rebate for cars with gasoline and diesel engines will also increase. Electric cars, however, are threatened by a drop in demand.

The outlook for German car manufacturers on the market in 2023 is not rosy. The director of the private institute Center Automotive Research (CAR) in Duisburg, Ferdinand Dudenheffer, even says that "the picture is bleak" when it comes to car sales in Europe.

Admittedly, the order lists are still quite long, but according to Dudenheffer's analysis, the surplus of new car purchases was only due to supply chain disruptions and shortages of semiconductors and other important parts.

A smaller offer with higher margins

Along with the closures during the pandemic, a special situation developed - all manufacturers made fewer cars than originally planned, so the supply decreased worldwide. And what was produced was sold with large margins. The big discounts that were normal in the industry no longer existed.

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"That will come to an end this year," says Dudenheffer and explains: "The order lists will shrink, so the customer will be in demand." Inflation and high energy prices as well as the recession will lead to a blockage in the purchase of new cars. "In 2023 brings a revival of discounts on car purchases".

"Europe as a loser"

As reported by N1, Dudenhefer believes that Europe will be the loser. He forecasts a small increase in the purchase of new cars in Germany, but expects a decline in sales during 2023 in France, England, Italy, as well as in Russia as a "special case".

In contrast, he expects an increase in the number of cars sold in Asia and North America. Namely, China and the United States of America have launched programs to revive the economy that could be good for the automotive industry as well.

Danger threatens from the USA

The Biden administration passed the Inflation Reduction Act, which foresees government expenditures of 430 billion dollars over a ten-year period. Among other things, the US government promises every buyer of an electric car a tax reduction of $7,500, if the car is manufactured in the United States of America.

Similar rules apply to all other branches, and those measures are aimed mainly at China. But the German Bankers' Association estimates that the law is vague enough that it could also exclude car manufacturers from Germany, who would then have to open production facilities in the US.

Electric car boom

In Germany, the number of registered electric cars has increased significantly. Namely, from June 2020, electric cars with a price below 40,000 euros receive subsidies from the state amounting to 6,000 euros, and car manufacturers add a discount of 3,000 euros to that. Thus, the sale of those cars is stimulated with a total of 9,000 euros. Buyers of partial electric cars with so-called hybrid drive can count on a premium of up to 6,750 euros.

According to the CAR Institute's calculations, by the end of 2022, the number of these cars could reach 28 percent of the total German market. That would be a total of 720,000 electric cars, of which 326,000 are hybrids and 394,000 fully electric.

Subsidies are being reduced

As of January 2023, subsidies are being reduced, and electricity prices are drastically increasing. The state "brake on the price of electricity" does not bring relief either. Namely, it applies to 80 percent of electricity consumption, and charging the batteries of electric cars is an additional burden on the energy balance of the household.

Both automakers and environmental activists see the oft-mentioned "traffic reversal" as a danger.

Unfavorable wind from China

In China, the largest automotive market in the world, German manufacturers are exposed to fierce competition. BMW and Mercedes sell more than 30 percent of their cars there. Volkswagen Group sells even more than 40 percent of its cars in China.

But it seems that the German automakers' formula for success so far in China no longer works when it comes to the electric car. The German newspaper "Handelsblat" reported that the new Chinese company "Human Horizons" with its electric car model "HiPhi X" is ahead of its competitors in the segment of luxury cars, where the profit is the highest. Until now, it was the domain of Mercedes, BMW and Audi.

And in other segments, local Chinese car manufacturers such as BYD, GAC, Li auto and Nio are winning the race with European competition, writes DW. Meanwhile, German engineers who thoroughly test Chinese products say that these Chinese cars are of good quality, but they are cheaper.

Danijel Reska, an expert in the American management companyassets Alliance Bernstein says that the traditional strength and reputation of German carmakers with gasoline and diesel engines does not automatically transfer to electric cars. That trend will intensify in 2023.

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