German car production recovers, but only temporarily

German automotive association VDA has improved its forecast for production of cars in 2023, but does not exclude another downturn going forward.

The association now expects output of 4 million passenger cars from German assembly lines, 15% more than last year. Its previous expectation stood at 3.8 million units. It attributes the improvement to better availability of components along the supply chain. However, it notes the figure is still 14% below the pre-crisis level of 2019, at 4.7m units.

“We may see an upswing in production, but the situation remains tense,” says VDA president Hildegard Müller. She points out that figures from the first half-year are a “rear-view mirror view”, warning that “our expectations for the coming quarters are not positive”. Müller adds: “Order intake has been weakening for some time, and we will feel that once the order backlog has been worked down.”

Meanwhile, steelmakers are offering diverging perspectives on the automotive economy. Thyssenkrupp, for example, has reported “significantly higher order volumes, especially from the automotive industry”. During the presentation of its June-quarter results, chief financial officer Klaus Keysberg emphasised the “upward trend” when asked by Kallanish for the company’s assessment of its automotive industry business.

A similar sentiment was expressed by voestalpine, which stated that the automotive segment in its portfolio is performing “at least stably”. The company is positive that “this development should by and large continue for the rest of the business year”, which means into the first quarter of 2024. At the firm’s latest press conference call, chief executive Herbert Eibensteiner noted the company has shifted volumes to automotive purposes, which were originally meant for other sectors that turned out particularly weak, like mechanical engineering.

A somewhat different impression comes from Swiss Steel, with its special bar quality products. The sales volume of its engineering steels from January to June this year was considerably below the prior half-year, down 20%, on the back of lower sales volumes in the automotive industry, it states.

Christian Koehl Germany