By Neetha Mahadevan
FRANKFURT--New car registrations in Germany rose on the year in
January thanks to strong demand for domestic brands and a sharp
rise in commercial purchases, according to data released
Tuesday.
Germany's Federal Motor Transport Authority, or KBA, said
211,337 passenger cars were registered in Europe's largest car
market in January, an increase of 2.6% on the year.
Demand for domestic brands rose 4% on the year, while foreign
brands declined 1% compared with the same month a year earlier.
"The continued strong orders from abroad and the surprisingly
higher orders from the domestic market are encouraging," said
Matthias Wissmann, President of the German automotive industry
association VDA, but he cautioned against euphoria after the
encouraging start.
"The global economic outlook in recent months have deteriorated
sharply, while the volatility has increased in the markets -
despite the fall in the price of oil," Peter Fuss, an auto analyst
at Ernst & Young said. This has led to "considerable
uncertainty among businesses, which is reflected in a decreasing
willingness to invest."
The Association of International Motor Vehicle Manufacturers, or
VDIK, President Volker Lange noted the continuing downward trend in
private consumption, which fell 9% in January. He hoped private
customers will start buying after the winter season and help the
car market to stabilize in the medium term. Commercial consumption
surged 9% on the year.
Despite record levels of employment, wages increases and low
interest rates, Germans are reluctant to buy new cars due to the
"rise in the quality of life of cars as well as emergence of
additional mobility options such as car sharing or remote buses,"
Ernst & Young's Peter Fuss said.
Among German brands, Volkswagen AG (VOW.XE), Europe's largest
car manufacturer, held on to the lion's share of the market,
estimated at 25% in January, KBA said. Porsche, Smart and Mini also
reported double-digit growth, while Mitsubishi, Lexus, Nissan and
Jeep posted strong growth among foreign brands, KBA said.
German manufacturers exported about 3% fewer cars compared with
the same period last year, while car makers also scaled back on
production in January. VDA President Mr. Wissmann blamed fewer
working days for the decline.
Nevertheless, analysts are positive on the automobile sector
this year, particularly in Europe.
"Improving European consumer sentiment and disposable income can
benefit not just European car sales but also earnings and, hence,
equity prices," Evercore ISI analyst Arndt Ellinghorst said
pointing to the strong start to the year for European car sales in
France, Italy and Spain.
Ernst & Young expects new car registrations to increase
about 3% this year.
European car sales started the year on a high note, with France
up 5.9%, Italy rising 11% and Spain surging 28%, despite fewer
selling days. ACEA, the European association of auto makers, is
slated to release January registration data on Feb. 17.
Write to Neetha Mahadevan at neetha.mahadevan@wsj.com