German car sales soar in March as supply woes ease

Sales of new cars soared in Germany in March, official figures showed Wednesday, in the latest sign that the industry is shaking off the supply chain problems that have curbed production in recent months.

A total of 281,361 new cars hit the road in Europe's biggest economy last month, up 16.6 percent on a year earlier, according to the KBA federal transport authority.

The sharp rise, following a more modest 2.8-percent increase in February, showed that a global shortage of semiconductors has eased and manufacturers are now catching up on filling orders, said EY analyst Peter Fuss.

"We are seeing a noticeable improvement in the supply situation" that led to "massive production losses" last year, Fuss said.

"Order books are full. Production can be ramped up accordingly," he added.

SUVs remained the most popular choice in March, accounting for almost 30 percent of sales.

Sales of all-electric vehicles rose by 28 percent with more than 44,000 units sold, still well below the more than 100,000 EVs sold in December when customers raced to take advantage of government subsidies before they expired.

Demand for plug-in hybrids however plunged by 38.5 percent in March as a result of the absence of new sales incentives.

Germany's electric car market remains heavily reliant on discounts and government support, Fuss noted. Without those, he said, "buyers stay away".

The March increase in new registrations is likely to be an outlier, Fuss said, warning of headwinds for the industry once manufacturers have worked through their order books.

"Weak economic development and high inflation are leading to declining orders for new cars," he said.

For the whole of 2023, Fuss expects to see new car registrations increase by around 10 percent year-on-year.