Mittwoch, 6. Mai 2009

Germany's Car Exports

There's been a lot of press coverage about the beneficial effects of Germany's car scraping bonus: German car sales are up substantially compared to last year. And while most of the cars sold are cheap foreign models, it is usually emphasized that at least VW and Opel are profiting quite a bit.

So what is the state of Germany's car-industry?

Unfortunately not good at all.

According to the SZ, German car production was 34 % lower yoy in April. And that's based on number of cars, not on value. Taking into account that cheap VWs and Opels are doing well, whereas expensive cars are doing really badly, the value of produced cars probably dropped 40-50 % (my guesstimate).

The main problem is exports: April exports were down "nearly by half" volume-wise (data by value is not yet available). And based on Destatis data, Jan/Feb exports were down 44 % in value-terms.

In fact, the drop in car exports is the single biggest reason for the steep drop in German GDP projected for this year:

In 2008, exports of cars and car parts accounted for 18 % of German exports (according to Bundesbank data). That's 7.2 % of GDP. Of course not all of this is value-added, as some components and commodities were imported. So let's say 6 % of GDP net of imports.

An assumed drop of 40 % (quite possible, based on an actual drop of 45 % in the first 4 months) therefore lowers German GDP by 2.5 %.

In other words: If we are expecting a GDP drop of 6 % in 2009, roughly 40 % of this drop is due to the decline in car exports.

That tells you something about the importance of cars for the German economy, and the extent of the drop in foreign demand.

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