Car registrations drop in Europe due to a disastrous German December

The European auto sector is starting to slow down, not only in production but also in registrations, and that is not a good sign. The culprit for the decline has Berlin as its capital.

Passenger car registrations in the European Union fell 3.3 percent year over year to 867.1 thousand units in December 2023, marking the first decline in 17 months due to a high base effect in December last year.

Germany saw a double-digit contraction, with a 23% year-on-year drop. The end of subsidies for electric cars convinced Germans not to buy them. It can be seen that the electric car is not sufficiently attractive. In contrast, significant increases were observed in major markets such as France (+14.5 percent) and Spain (+10.6 percent).

Meanwhile, battery electric car registrations in the EU declined for the first time since April 2020, down 16.9 percent to 160.7 thousand units, or 18.5 percent of the market. The decline can be attributed to a relatively robust performance in December 2022 and a significant drop in Germany (-47.6%), the largest market for this energy source. Sales in Germany practically halved.

For the full year 2023, car registrations in the EU grew 13.9 percent over 2022 to 10.5 million units. Double-digit increases were recorded in most markets, including three of the largest: Italy (+18.9%), Spain (+16.7%), and France (+16.1%).

Here is the related graph:

We can draw some simple lessons:

• sales hold where there are subsidies for new car registration, such as in France, Spain, and Italy. In Spain and Italy, the government pays 5,000 euros per electric car; in France, the figure even goes up to 7,000 euros. Here, sales hold precisely because of the subsidies;
• In Germany, sales of electric cars literally halved with the end of subsidies. We will see if this is the end of a love affair in January. If so, it would be a disaster for the automakers, who have invested huge sums in the sector.