VDIK Forecast: Plunge for Combustion Engines - Rise for Electric Vehicles

After the decline in the previous year, the Association of International Motor Vehicle Manufacturers (VDIK) has forecasted an even more severe slump for the German passenger car market in 2021. Importers estimate that only 2.6 million passenger cars will be newly registered throughout the year. However, the sales of battery electric cars and plug-in hybrid vehicles will increase by a whopping 70 percent.

"Our hopes for a recovery in the automotive market after the severe slump caused by the Corona crisis last year will be dashed in 2021. However, the problem is not on the demand side. Customers want to buy more cars than the industry can produce. At the same time, the boom in electromobility has continued. That is the bright spot," summarizes VDIK President Reinhard Zirpel.

German passenger car market collapses

The German passenger car market is expected to decline by eleven percent in 2021. In the end, around half a million fewer new cars will be registered than the association had expected. Compared to the pre-crisis year 2019, the market will "lose" a total of around one million units. However, order intake was at a good level, and order backlogs were even at a record level. The automotive industry, however, is struggling with production and supply bottlenecks.

"The global shortage of semiconductor products hits our industry with full force. Both international and German manufacturers are fundamentally affected to a similar extent. We must assume that this problem will accompany us into the coming year," Zirpel further analyzes.

Boom in electromobility continues

In contrast to the overall market, battery electric cars and plug-in hybrids experienced a continuing boom. The association estimates that around 660,000 electric vehicles will be newly registered in 2021. That's an increase of 70 percent. Their share of the overall market will increase from 13.5 percent in the previous year to 25 percent now. One in four new cars in 2021 is an electric car. A total of around 1.1 million new passenger cars with alternative drivetrains will be newly registered.

Even commercial vehicles do not recover

The expected recovery is also failing to materialize in the German commercial vehicle market. Around 345,000 commercial vehicles are expected to be newly registered in 2021, a decline of 1 percent. International manufacturers are expected to increase their market share in commercial vehicles from 28 to around 32 percent in 2021.

Forecast: E-car fleet could reach 2 million vehicles

Assuming that the supply of parts normalizes again, around 3 million new passenger cars can be expected in 2022. Additionally, the association expects around 360,000 new commercial vehicles.

"We also expect around 850,000 new electric vehicles in Germany next year. The stock of electric cars could grow to around two million by the end of 2022," Zirpel estimates.

Traffic light coalition to create conditions for alternative drives

In the transportation sector, alternative drives are by far the most important tool for reducing CO2, according to Zirpel.

"It is now crucial that the new federal government quickly enacts the necessary incentives and framework conditions," Zirpel appeals.

In this context, he welcomed the extension of the innovation premium for electric vehicles announced in the coalition agreement until the end of 2022 in its unchanged form and simultaneously called for a revision of the environmental bonus guidelines as one of the first official acts this year. This would avert the looming slump in the e-car market so far, Zirpel believes. The coalition agreement also includes a phased reform of the purchase premium.

"But we must warn against a sharp reduction in the environmental bonus in the coming years. The premium remains very important for the market ramp-up in the medium term," Zirpel continues.