German cars are known as one of the best vehicles in the world, renowned for their quality, performance, and engineering excellence. As a result, they are highly sought after by whoever can afford them.
Though German cars have their problems, manufacturers such as BMW, Audi, and Mercedes-Benz have a global reach, some countries have a particular affinity for these iconic vehicles.
We will look at the factors that contribute to the popularity of German cars in certain regions whilst examining some of the key trends in the automotive industry shaping this demand.
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The Chinese market is crucial for German automakers as China’s growing middle class has a robust appetite for luxury vehicles.
According to data from the German Association of the Automotive Industry (VDA), China accounted for 30% of all German car exports in 2020, which surpassed that of 2019.
In 2021, Germany’s exports of passenger cars to China increased by 14% year-on-year to 16.7 billion euros ($18.7 billion).
Trade between Germany and China rose to a record level in 2022, with goods worth around 298 billion euros ($320 billion) traded between the two countries, up around 21% from 2021.
Despite political warnings in Berlin about excessive dependence, China remains Germany’s most important trading partner for the seventh year in a row.
German carmakers are deepening their integration into China’s innovation system by establishing strong partnerships with Chinese tech and local companies by increasing investment in research and development.
Additionally, the popularity of German cars in China is due to a combination of factors such as rising incomes, an increasing middle class, and a desire for high-end vehicles.
To retain their global competitiveness and further solidify their position in the Chinese market, there is a high likelihood that German carmakers will remain Chinese suppliers.
2. United States of America
The United States is a significant market for German automakers as American consumers have a long-standing affinity for German performance, engineering, and safety features in cars.
With assembly plants in
- Tennessee, and
- South Carolina
German automakers have established a powerful presence in the US market for decades.
However, there have been concerns about the trade imbalance between the US and Germany as the market remained between 2.6 million and 2.8 million with year-on-year variations not exceeding 7% in both directions from 2010 to 2013.
In 2014, a 4-year uptrend began that brought an all-time high for 3 years in a row, reaching a maximum of 3.51 million in 2017.
The German market between 2018 and 2019 grew higher, reaching the 3.6 million mark.
The arrival of the pandemic in 2020 caused colossal problems to the German car market by falling 19% back under the 3 million mark it attained by 2019 and selling 1.3 million vehicles, which accounted for about 8% of total US car sales.
After the pandemic, this downtrend continued with the market falling 10% in 2021 and staying relatively flat in 2022.
The combination of factors behind the industry’s struggle includes:
- The disruption in the global supply chain caused by the lack of raw materials
- The production of microchips, and
- The government’s push toward electric vehicles
These factors, according to experts, are said to continue to pull down sales in 2023.
3. United Kingdom
About 14% of all passenger cars made in Germany are sold in the UK, which makes it a little over one in every seven cars. This makes up about 18% of the UK’s total car imports.
The major reasons for the popularity of German cars in the UK are their premium and high-quality features that offer excellent performance, comfort, and safety.
These German brands have built a reputation for engineering excellence which is highly valued by British buyers interested in an exceptional driving experience.
BMW and Mercedes-Benz, in particular, are best known for producing prestigious vehicles that are associated with wealth and social status.
For many British car owners, owning a German car is a status symbol that further drives demand for these brands.
However, due to the Brexit transition, the percentage of German cars sold in the UK was negatively affected.
According to a survey, rising prices in the UK due to a hard Brexit would put 18,000 German auto industry jobs at risk as all tested Brexit scenarios were found to affect passenger cars export volumes from Germany to the UK, negatively.
Under a pessimistic scenario, applying the MFN tariff rate and utilizing a forecasted large reduction in the GDP of the UK, a 15.39% decrease in passenger car exports from Germany would have a negative effect on the UK by 2030.
However, under a central scenario that involves applying a 5.00% tariff and only a moderate forecast reduction in the GDP of the UK, export quantities are forecast to decrease by 9.20%.
Known for quality, reliability, and a wide range of car models which cater to different needs and preferences, German cars are popular among consumers in France.
Being geographically close to each other also makes it much easier and more cost-effective to import cars from Germany to France than to other countries.
In 2021, Germany exported $9.21 billion worth of cars to France, which placed them in the 4th spot as the largest importer of German cars.
During the last 26 years, the exports of Germany to France have increased at an annualized rate of 2.75%, from $58.7B in 1995 to $119B in 2021.
There is no information available on the exact percentage of German cars being sold in France in recent years. Meanwhile, here’s why German cars are so expensive.
German automakers have invested in marketing their vehicles to Italian consumers using a range of tactics, such as sponsoring major sporting events and partnering with high-profile celebrities.
These efforts have helped to increase the visibility and desirability of German cars in the Italian market in recent years.
The best-selling car brand in Italy from 2018 to 2021 was Volkswagen with roughly 126,100 passenger cars sold followed by other car brands such as Toyota.
In 2021, Germany exported $8.02 billion worth of cars, which made it the fastest-growing export market at that time. This made Germany have a 35% share of passenger cars with diesel engines in the Italian market.
According to data from the Dutch Central Bureau of Statistics (CBS), the Netherlands imported 57% of its passenger cars from Germany in 2020.
And in 2019, there were roughly 228,000 passenger cars imported from Germany.
The total value of cars imported from Germany to the Netherlands in 2021 is $5.47 billion, which is relatively high.
The quality of German cars is renowned for their robustness, luxury, and reliability, and the prices of new and used cars in Germany are often lower than in the Netherlands.
This is one of the major reasons why the Netherlands imports cars from Germany. Additionally, if you import a car that is one year old, you can get at least a 30% discount on the Dutch tax called BPM4.
It is also possible to save a lot of money by importing a car from Germany to the Netherlands. You may also want to explore why German cars are so fast.
With China unarguably being the largest market for German automotive exports, these significant statistics speak to the increasing affluence of the Chinese middle class and their growing demand for luxury automobiles.
Other countries highlighted above also have a strong affinity for German automobiles, which can as well be attributed to the perceived quality, reliability, and prestige associated with German engineering and design.
Providing a detailed overview of the global demand for German automobiles and the challenges facing the industry.
This article highlights the importance of innovation and adaptation for German automakers to maintain their position as leaders in the global auto industry.