Trends in the markets
TRENDS IN THE MARKETS FOR PASSENGER CARS AND LIGHT COMMERCIAL VEHICLES
In fiscal year 2022, the volume of the passenger car market worldwide remained on a level with the prior year at 69.6 million vehicles. Gains and losses in individual markets were very uneven, since shortages and disruption in global supply chains, the effects of the Russia-Ukraine conflict and the further consequences of the Covid-19 pandemic varied around the world in terms of the strength of their impact. Shortages of semiconductors and other intermediates, which already occurred in the second half of 2021, and the resulting supply bottlenecks, could also not be fully resolved in 2022.
Slight or noticeable growth was recorded in the overall markets of the Asia-Pacific and Middle East regions respectively, while South America and Africa were on a level with the previous year. Sales fell in the remaining regions: while market volume was slightly down in Western Europe and noticeably down in North America, Central and Eastern Europe recorded a very strong decline.
In the reporting period, the global volume of new registrations for light commercial vehicles was slightly (−3.0%) lower than in the previous year.
Along with fiscal policy measures, factors substantially affecting the sector-specific environment were shortages and disruption in global supply chains, the Covid-19 pandemic and the impacts of the Russia-Ukraine conflict. This contributed considerably to the mixed trends in unit sales in the markets in 2022. As a result of the Russia-Ukraine conflict, sanctions were imposed that restricted the production and sale of vehicles, particularly in Russia. The fiscal policy measures included tax cuts or increases, incentive programs and sales incentives, as well as import duties. In addition, non-tariff trade barriers to protect the respective domestic automotive industries made the movement of vehicles, parts and components more difficult.
In Western Europe, the number of new passenger car registrations in the reporting period was slightly down on the previous year’s weak level, declining by 4.3% to 10.2 million vehicles. While the first half of the reporting year fell significantly short of the comparison period, the number of new registrations in the subsequent months were up again on the – in some cases substantially weaker – prior-year figures. The performance of the large individual passenger car markets was negative in fiscal year 2022: France (−7.7%), the United Kingdom (−2.0%), Italy (−9.8%) and Spain (−7.1%) did not achieve their respective prior-year levels.
The volume of new registrations for light commercial vehicles in Western Europe was sharply lower than in the previous year, falling by −20.7%.
After the slight recovery in the prior year, the volume of the passenger car market in the Central and Eastern Europe region fell very sharply in the 2022 fiscal year and was down by 37.2% at 1.8 million vehicles. The number of sales was also on an overall downtrend in the individual markets. The Russian passenger car market in particular saw substantial losses and more than halved in the period under review (−60.9%). In Central Europe, the decline in new registrations was smaller at −6.0% in Poland and −7.1% in the Czech Republic.
The market volume of light commercial vehicles in Central and Eastern Europe was sharply below the prior-year level (−28.6%). In Russia, the number of vehicles sold in the reporting period fell by 45.2% compared with the previous year.
The volume of the passenger car market in Türkiye in the reporting period was slightly up on the weak prior-year level. In South Africa, the growth trend in passenger car sales that began in 2021 continued strongly with a rise of 20.4%.
The volume of new registrations of light commercial vehicles in Türkiye in the reporting period was on a level (+0.5%) with 2021, while South Africa recorded slight growth (+3.6%).
At 2.7 million, the total number of new passenger car registrations in Germany in the 2022 fiscal year was similar to the weak prior-year level (+1.1%). Shortages and disruption in global supply chains continued to restrict vehicle availability. With delays in semiconductor deliveries persisting, and the associated measures such as cutbacks in production and production shutdowns therefore continuing too, domestic production and exports remained at a low level in the reporting period: passenger car production increased by 10.8% to 3.4 million vehicles and passenger car exports grew by 10.1% to 2.6 million units.
The number of sales of light commercial vehicles in Germany in the reporting period was sharply down on the 2021 figure (−21.1%).
At 16.4 million vehicles, sales of passenger cars and light commercial vehicles (up to 6.35 tonnes) in the North America region in fiscal year 2022 were noticeably lower compared with the prior-year (−7.3%). At 13.9 million units, the market volume in the USA declined by more than the average for this region (−8.0%). The Canadian automotive market registered a noticeable fall in sales figures to 1.5 million units (−9.7%) in the reporting period, while new registrations of passenger cars and light commercial vehicles in Mexico saw a noticeable rise of 7.0% compared with the prior year to 1.1 million vehicles.
In the South America region, the volume of new passenger car and light commercial vehicle registrations in the reporting period was on a level with the prior year at 3.6 million units (+1.8%). This continued the positive growth trend that began in the previous year, albeit at a slower pace. In Brazil, the number of new registrations was also on the same level as the previous year at 2.0 million units (−0.8%). Total exports of vehicles manufactured in Brazil increased by 28.9% to 450 thousand passenger cars and light commercial vehicles. In the Argentinian market, demand for passenger cars and light commercial vehicles in the 2022 reporting period rose noticeably by 7.0% to 380 thousand units.
In the Asia-Pacific region, the volume of the passenger car market in fiscal year 2022 was slightly higher than the previous year’s figure at 33.8 million units (+3.6%). The absolute rise in demand for passenger cars in the region was again primarily attributable to the positive trend in the Chinese passenger car market. Here, the recovery seen in 2021 continued but was affected by the semiconductor shortage and local lockdowns in connection with the spread of the Omicron variant of the SARS-CoV-2 virus. Overall, the volume of demand in China totaled 21.0 million units (+1.6%), putting it on a level with the previous year. In India, passenger car sales again rose strongly by 23.2% compared with the prior year to 3.6 million units. New registrations in the Japanese passenger car market in the reporting period were noticeably down on the already weak prior-year level at 3.5 million units (−6.9%).
The volume of demand for light commercial vehicles in the Asia-Pacific region in 2022 was slightly above the previous year’s level (+2.1%). Registration volumes in China, the region’s dominant market and the largest market worldwide, were slightly lower, falling 3.1% short of the prior-year figure. The number of new vehicle registrations in India was strongly up on the prior-year level; in Japan this figure was slightly lower than in the previous year.
TRENDS IN THE MARKETS FOR COMMERCIAL VEHICLES
Since July 1, 2021, Navistar has been a TRATON GROUP brand, making it part of the Volkswagen Group’s Commercial Vehicles Business Area. This has expanded the relevant markets in the commercial vehicles business to include North America (consisting of USA, Canada and Mexico).
In the markets that are relevant for the Volkswagen Group, global demand for mid-sized and heavy trucks with a gross weight of more than six tonnes experienced noticeable growth in fiscal year 2022 versus the comparison period (+5.5%). Global truck markets declined sharply. This was due to upheaval on the Chinese market, which slumped dramatically on the back of purchases brought forward to 2021 prior to the introduction of the new emission level and due to the zero-Covid strategy pursued there.
In the 27 EU states excluding Malta, but including the United Kingdom, Norway and Switzerland (EU27+3), the number of new truck registrations was noticeably up on the prior-year level, increasing by 5.1% to a total of 337 thousand vehicles. Growth could be observed in many truck markets in the region, albeit to differing degrees. The substantial market recovery seen in 2021 slowed during the reporting period to a noticeable level of growth. New registrations in Germany, the largest market in this region, were on a level with the previous year (−1.7%). The United Kingdom recorded a noticeable increase of 9.8%, while demand in France was on a level with the previous year (−0.3%). The Russian market declined sharply as a result of the Russia-Ukraine conflict. Türkiye, by contrast, recorded a strong rise in new registrations of 24.7%. In the South African market, demand rose significantly (+12.3%). The truck market in North America is divided into weight classes 1 to 8. In the segments relevant for Volkswagen – Class 6 to 8 (8.85 tonnes or heavier) – new registrations were significantly higher (+13.6%) than the previous year’s figure. In Brazil, the largest market in the South America region, demand for trucks in the reporting period was slightly lower year-on-year (−2.5%).
Demand in the bus markets relevant for the Volkswagen Group was on a level with the previous year (+0.3%). Demand for buses in the EU27+3 markets in the reporting period was slightly down overall on the level of the previous year (−3.8%), with the picture varying from country to country. The school bus segment in the USA and Canada recorded a noticeable decline (−6.8%) compared with the prior year. Demand for buses in Mexico also declined noticeably year-on-year (−7.4%). In Brazil, by contrast, demand for buses increased and was strongly up on the previous year’s level (+23.4%).
TRENDS IN THE MARKETS FOR POWER ENGINEERING
The markets for power engineering are subject to differing regional and economic factors. Consequently, their business growth trends are mostly independent of each other.
The marine market remained below the prior-year level in 2022. This is especially attributable to the fact that the demand in merchant shipping declined. In this sub-market, there was a decline particularly in the segment for container ships, tankers and bulk cargo carriers compared with the previous year’s high level. The segment for gas tankers, in contrast, recorded a stable trend. Slightly positive development was evident in the sub-market for cruise ships and passenger ferries. Here, the easing of Covid-19-related restrictions enabled business activity to grow again. The special market for government vessels, which is supported by state investment, was active due to the current geopolitical situation. In the offshore sector, the existing overcapacity continued to curb investment in offshore oil production despite the sharp rise in oil and gas prices. In contrast, demand for offshore special ships for wind turbines developed positively. The uncertainty regarding future fuel and emissions regulations persisted once again in the overall market in 2022.
The market for power generation improved in 2022 compared with the previous year. Overall, a significant market recovery was evident despite inflation and challenges in supply chains. The trend away from oil-fired power plants towards dual-fuel and gas-fired power plants continued, underpinned by the resolution at the UN Climate Change Conference (COP26) and the resulting difficulties in financing oil-fired power plants. However, the Russia-Ukraine conflict also had a noticeable impact in the form of increasing gas and commodity prices, as well as a delayed availability of core components. There was still strong demand for new energy solutions such as hydrogen and long-term energy storage, with an ongoing clear trend towards greater flexibility and decentralized availability.
The market for turbomachinery improved again year-on-year. Prices for raw materials remained at a very high level, resulting in an increased demand for production facilities with turbo compressors, in both the raw materials and processing industry as well as the oil and gas business. The market of the new business fields for turbomachinery used in the area of decarbonization improved further compared with the prior year and was driven by persistently high but volatile prices for carbon dioxide certificates in European trading and by favorable changes in US tax law. However, demand for steam turbines for power generation improved only marginally, while demand for gas turbines declined slightly over the course of 2022.
The after-sales markets for engines in the marine and power plant business and for turbomachinery experienced significantly stronger growth in the 2022 reporting period than in the prior-year period, in which demand was hit by the Covid-19 pandemic.
TRENDS IN THE MARKETS FOR FINANCIAL SERVICES
Demand for automotive financial services was at a high level in the first quarters of 2022 due, among other things, to persistently low key interest rates in the main currency areas. In combination with the Covid-19 pandemic and continuing limits on vehicle availability, the rise in interest rates that began in the second half of the year put pressure on demand for financial services in almost all regions.
The European passenger car market was still affected by parts supply shortages in the reporting period; vehicle deliveries were down on the prior-year period. By contrast, the share of financial services products in the new vehicle business grew positively and exceeded the 2021 figure. The main drivers of this trend were positive changes in the sales mix that benefited the private customer business, which lends itself particularly to financing, and an increased share of leasing contracts in the fleet business. The positive trend in the financing of used vehicles continued in 2022; in particular, the sale of after-sales products such as servicing, maintenance and spare parts agreements increased. Financial services activities in Russia were negatively affected by the Russia-Ukraine conflict and the impact of the international sanctions.
In Germany, the continuing challenges presented by the faltering parts supply in vehicle production impacted on vehicle sales and the financial services business. The decrease in deliveries of new vehicles led to fewer new leasing and financing contracts being concluded in the reporting period than a year earlier. New vehicle penetration was down slightly on 2021. Overall, the level of new contracts for used vehicles continued to be similar to that of the previous year. The number of new after-sales contracts was up in the second half of the year and ended the reporting period only slightly down on 2021 levels. With few exceptions, the number of new contracts in the insurance business fell short of the figures achieved a year earlier.
In South Africa, demand for financing and insurance products for new and used cars remained subdued in 2022. Coordinated campaigns to promote such products were scaled back due to limited vehicle availability. To counter rising inflation, the South African Reserve Bank has begun to raise interest rates.
In the North America region, supply bottlenecks meant that vehicle deliveries in 2022 were down on the previous year. The US and Canadian markets also saw declining demand for leasing and financing contracts because of interest rate hikes. In the Mexican market, the percentage of new leasing and financing contracts remained on a level with the previous year and new contracts for after-sales products were up year-on-year.
In the South America region, there was excess demand for vehicles in a volatile environment, exacerbated in Argentina by restrictions on imports. The rise in interest rates kept the number of cash purchases at a high level. In Brazil, there was an increase in the number of new financing contracts.
In the Chinese market, passenger car sales were impacted by parts supply shortages and local restrictions due to the pandemic. Both the proportion of credit-financed vehicle purchases and growth in new contracts declined. The comparative prior-year figures were not achieved in the reporting period.
In fiscal year 2022, the financial services business in the market for heavy commercial vehicles was slightly up on the comparative prior-year level, also affecting financing and leasing contracts in Europe and Brazil.