Germany beyond “peak car” as material shortages suppress production - report
Clean Energy Wire
Car production numbers in Germany have been falling since late 2019 and unresolved raw material supply bottlenecks look set to continue to have a negative impact, meaning the country could already have reached “peak car” and will not return to previous production levels, a report by Deutsche Bank (DB) Research said. “Due to continued semiconductor shortages, 2021 will be another weak year for Germany as a car production location,” the report said. “Looking at the industry’s fundamentals we think it is not likely that the pre-crisis level in car production will be reached again,” DB research said, adding that this would at least be true for the number of cars produced. “This means peak car production in Germany has already passed us.”
The authors note that lower production levels in Germany have not led to carmakers turning a loss. “This lays bare the discrepancy between Germany as a car production location and the state of the German car industry,” DB Research said. Initially, a lower demand for passenger cars had reduced production by 11.3 percent in 2019 and output dropped by another 23.5 percent in 2020 due to the effects of the coronavirus pandemic. While production levels recovered slightly after first pandemic response measures had been lifted, supply bottlenecks for semiconductors from Asia meant the car output remained low, with August 2021 seeing 32 percent fewer cars produced than one year before. The share of e-cars in total car production in Germany is growing and plant retrofitting is leading to further complications. Moreover, e-cars usually require more micro chips than combustion engine cars, meaning the lack of semiconductors poses even greater challengers, DB Research said. In general, it appears that Germany’s carmakers are better prepared to weather the transition to electric cars than Germany as a car production location, the authors said.
The car industry is one of Germany’s most important employers and a pillar of regional economies across the country. While initially late to join the shift to electric mobility, all major carmakers have now announced a full or near-full switch to e-cars and have restructured and ramped up production capacities in Germany and elsewhere accordingly.