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Demand for new cars drops in Germany due to increase in coronavirus

Registrations dropped 20 percent compared with August 2019, a huge drop compared to July, when registrations dropped only 5.4 percent year-on-year, data published by the Federal Motor Transport Authority showed.

Germany recently reported its highest case numbers since April, and is beginning to tighten restrictions on movement once again.

Chancellor Angela Merkel last week said coping with the outbreak will become more challenging in the near future.

“A sharp increase in infections and local restrictions on public life could once again have a major impact on the new car market and lead to renewed uncertainty among buyers,” said Peter Fuss, an analyst at EY, who expects new registrations to drop by a quarter this year.

“New car purchases are being postponed where possible,” Fuss said, with drops more pronounced in the commercial sector.

The effect of the German government’s decision to slash VAT, which Berlin introduced from July until the end of 2020, has “fizzled out”, EY said.

The first eight months of this year show a 29 percent decline in registrations, the lowest level since reunification in 1990.

The market collapsed in April and May, when demand dropped 61 percent and 32 percent respectively, as lockdowns put in place due to the coronavirus pandemic and the demand was almost non-existent.

However, the dire numbers do not affect all automakers equally.

BMW AG continues to have a relatively good year compared to its rivals. It sold 15.2 percent more cars in August compared to the same month in 2019.

But all other German brands, apart from BMW-owned Mini, showed drop in sales, including Mercedes, and Opel, which fell 47 percent.

Volkswagen held its position with the largest share of new registrations at 43,842, despite a drop of 17 percent compared with those in 2019.

Tesla continued its growth in Germany, with over five times as many cars sold in August as in the same month of 2019, and is the only brand to have boosted sales in 2020.

It came as CEO Elon Musk visited Germany this week while construction of a massive new auto plant outside Berlin continues.

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