Germany Heading For Recession – Good News For Car Buyers (Lessees)?
Monday, 9. September 2019
Fears that Germany is heading for recession are mounting after industrial production in the eurozone’s most important economy fell sharply in July. The 0.6pc drop in factory output will put pressure on the European Central Bank to take urgent action.
The official data for July followed up the disclosure that total output, or GDP, in Germany fell in the second quarter. A further decline in GDP between July and September would mean that Germany is in recession.
The driving force behind this reduction is reported to be car manufacturing which has plummeted by 20% from its peak at the end of 2017. The main contributor has been the sharp switch from diesel and petrol to hybrid and electric vehilces.
A transition that the Germans have struggled to keep up with when compared to the rest of the world. And with the spotlight on their biggest producer – VW, they have also struggled to keep on top of the tougher real-world emissions tests applied to current petrol and diesel models.
Whilst this has generated a financial cloud over the whole of the Eurozone – when Germany suffers, everyone suffers! And it may make life a little easier when Boris finally gets round to negotiating a deal, how will this affect British buyers of German cars?
Well, I’ve got it wrong in the past but whereas I had predicted increases in European car costs and lease rates at the beginning of the year I hadn’t expected Germany to be on the verge of recession.
So this could be good news for German car buyers In the UK and good for lease rates as German producers fight to keep their factories open and maintain staff levels. This could result in some large discounts coming our way and some exceptional lease rates.
That may sound like a good reason to hold back your decision to take a new car but I should add that this may not be the case if we exit without a deal or if the German economy suddenly shows signs of improving so if you see a good deal, don’t delay – ‘fill yer boots’! You may never see the deal again. By Graham Hill
