Trends in the markets
TRENDS IN THE MARKETS FOR PASSENGER CARS AND LIGHT COMMERCIAL VEHICLES
In fiscal year 2021, the volume of the passenger car market worldwide rose moderately by 4.2% to 70.9 million units from a weak level in the prior year. However, the growth was uneven owing to the effects of the Covid-19 pandemic, which varied strongly from region to region both in 2020 and in the reporting period. The semiconductor shortage and the resulting supply bottlenecks also had a negative impact in the second half of 2021. The overall markets of the Asia-Pacific, South America, Africa and Middle East regions recorded above-average growth. Increases in Central and Eastern Europe as well as in North America were slightly below the global average, while in Western Europe, the market volume declined further, falling short of the poor prior-year figure.
In the reporting period, the global volume of new registrations for light commercial vehicles was slightly (1.5%) higher than in the previous year.
The sector-specific environment was influenced significantly by fiscal policy measures, which contributed considerably to the mixed trends in sales volumes in the markets in 2021. These 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 2.0% to 10.7 million vehicles. The continuing restrictions aimed at containing the Covid-19 pandemic led to a year-on-year decline in deliveries in the first two months of 2021. From March to June, demand in each of the individual months exceeded that of the previous year, which had been affected by the pandemic as of the last third of the first quarter and particularly in the second quarter of 2020. In the second half of 2021, the number of new passenger cars registered declined month-on-month, in some cases substantially. This was due to the market recovery that had been experienced in the previous year, and, in particular, to the semiconductor shortage which reduced vehicle availability. Nevertheless, with the exception of Spain (−0.9%), the performance of the large individual passenger car markets was positive on the whole in fiscal year 2021: France (+0.5%), United Kingdom (+1.0%) and Italy (+5.6%).
The volume of new registrations for light commercial vehicles in Western Europe was moderately higher than in the previous year, increasing by 4.4%.
In the Central and Eastern Europe region, the market volume of passenger cars in fiscal year 2021 stood at 2.9 million vehicles, a modest 2.8% more than in the previous year, which had been strained by the pandemic. Here, the development of demand in the reporting period differed from market to market. In Central Europe, the number of new registrations saw a slower rate of growth on the whole, with a rise of 1.4% to 1.1 million units. By contrast, sales of passenger cars in Eastern Europe rose at a somewhat faster pace (+3.8%) to 1.8 million units. Here, the absolute growth in demand was mainly attributable to a higher level of new registrations in Russia (+2.6%).
The market volume of light commercial vehicles in Central and Eastern Europe was significantly higher year-on-year (+12.1%). In Russia, the number of vehicles sold in the reporting period was distinctly higher than in the previous year with a 7.5% increase.
In the reporting period, the market volume of passenger cars in Turkey was distinctly lower than in the prior year, down 6.9%. In South Africa, the number of passenger cars sold in 2021 was substantially (+21.7%) higher than the very weak prior-year figure.
In the reporting period, the volume of new registrations of light commercial vehicles was moderately down (−3.9%) in Turkey compared with the prior-year figure; in South Africa, by contrast, substantial growth (+22.3%) was recorded.
New passenger car registrations in Germany in fiscal year 2021 stood at 2.6 million units, falling noticeably (−10.1%) short of the previous year’s weak level and thus declining to the lowest level since German reunification. Along with the effects of the Covid-19 pandemic, this was attributable to early purchases made in 2020 due to the expiry of the temporary reduction in value-added tax and to the deterioration in the supply situation as a result of the semiconductor shortage.
Owing to a lack of semiconductor deliveries and related measures such as cutbacks in production and production shutdowns, domestic production and exports in the reporting period also fell short again of the comparable prior-year figures: passenger car production decreased by 11.9% to 3.1 million vehicles and passenger car exports fell by 10.3% to 2.4 million units.
Sales of light commercial vehicles in Germany in the reporting period were down by a slight 1.8% on the 2020 figure.
At 17.7 million vehicles, sales of passenger cars and light commercial vehicles (up to 6.35 tonnes) in the North America region in fiscal year 2021 showed moderate growth of 3.9% on the prior-year figure, which had been impacted by the negative effects of the Covid-19 pandemic. However, this growth weakened during the second half of the year mainly due to supply bottlenecks for semiconductors. In this region, the market volume in the USA also rose moderately year-on-year to 15.1 million units (+3.4%), although the momentum was also weaker. Of the light commercial vehicles, the SUV models in particular benefited from this increase. The Canadian automotive market saw a distinct rise in sales in the reporting period (+6.7%). In Mexico, new registrations for passenger cars and light commercial vehicles were up 6.8%, also distinctly higher than the comparable prior-year figure.
In the South America region, the volume of new registrations for passenger cars and light commercial vehicles in the 2021 reporting period was on the whole significantly higher at 3.5 million units (+12.9%) than the previous year’s weak level, which had been very severely affected by the impact of the Covid-19 pandemic. At 2.0 million vehicles, the volume of new registrations in Brazil was up slightly (+1.1%) on the prior-year figure. Total exports of vehicles manufactured in Brazil increased by +16.0% to 376 thousand passenger cars and commercial vehicles. In the Argentinian market, demand for passenger cars and light commercial vehicles in the 2021 reporting period rose noticeably by 9.7% to 356 thousand units.
In the Asia-Pacific region, the volume of the passenger car market in fiscal year 2021 rose to 32.7 million units, moderately (+5.0%) higher than the prior-year figure, which had been considerably impacted by the SARS-CoV-2 virus. Over half of the absolute rise in demand for passenger cars in the region was attributable to the favorable trend in the Chinese passenger car market, where the signs of a recovery that had begun during the second half of 2020 initially continued, but weakened in the latter months of the reporting period owing to the semiconductor shortage. Overall, the volume of demand totaled 20.8 million units, thus moderately exceeding the prior-year figure by 4.4%. In India, passenger car sales rose substantially by 26.2% to 3.0 million units compared with the comparatively weak prior-year figure. In the Japanese passenger car market, the number of new passenger cars registered in the reporting period was moderately down on the previous year at 3.7 million units (−3.2%).
There was a slight year-on-year decrease in demand for light commercial vehicles in the Asia-Pacific region in 2021, which was down by 1.2%. Registration volumes in China, the region’s dominant market and the largest market worldwide, were slightly lower, falling 2.4% short of the prior-year figure. The number of new vehicle registrations in India was significantly (−14.3%) lower than the prior-year level; in Japan this figure was moderately (−3.7%) down year-on-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 broadened the relevant markets in the commercial vehicles business, both for trucks and for the school bus segment, which expanded 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 pronounced growth versus the comparison period in fiscal year 2021 (+19.5%). In comparison with the previous year, which had been adversely affected by the Covid-19 pandemic, a recovery of the truck markets could be observed worldwide.
In the 27 EU states excluding Malta, but including the United Kingdom, Norway and Switzerland (EU27+3), the number of new truck registrations was significantly up on the prior-year figure, with growth of 17.1% to a total of 320 thousand vehicles. Growth could be observed in almost all truck markets in the region, albeit to differing degrees. The market recovery already evident since the second half of 2020 continued in the reporting year. Registrations in Germany, the largest market in this region, increased distinctly year-on-year (+6.2%). An increase of almost 60% was registered in Poland, while the UK recorded growth of 12.8%. There was also a distinct increase in demand in France (+6.1%). The Russian market experienced pronounced growth (+19.5%) and new registrations in Turkey increased by around 56% year-on-year, as compared with the low prior-year level. In the South African market, demand rose substantially (+20.8%). 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 markedly higher (+13.0%) than the previous year’s figure. In Brazil, the largest market in the South America region, demand for trucks in the reporting year was approximately 44% above the level seen in the previous year.
There was moderate growth in demand overall (+3.0%) in the bus markets that are relevant for the Volkswagen Group compared with the previous year. Demand for buses in the EU27+3 markets in the reporting year was overall in line with the weak level of the previous year (+0.1%), to differing extents in the individual countries. The bus market in North America recorded a moderate decline (−2.6%) year-on-year. Demand for buses in Brazil was slightly up on the previous year’s level (+0.9%). As a consequence of the Covid-19 pandemic, demand for coaches in particular was still virtually non-existent in all of the bus markets that are relevant for the Volkswagen Group.
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.
Despite the global impact of the Covid-19 pandemic and continuing uncertainty, for instance surrounding future emissions regulations, the marine market was significantly higher in 2021 than in the previous year. In merchant shipping, performance in the market for container ships in particular remained encouraging thanks to high demand combined with bottlenecks in transport capacity. Overall, the market areas excluding merchant shipping contracted slightly in 2021 compared with the prior year. Demand in the market for cruise ships and passenger ferries remained low due to the continuing difficult liquidity situation of shipping companies as a result of the Covid-19 pandemic. The special market for government vessels, which is supported by state investment, was below the prior-year level. In the offshore sector, the existing overcapacity continued to curb investment in offshore oil production. China, South Korea and Japan remained the dominant shipbuilding countries, accounting for a global market share of around 90% measured in terms of the number of ships.
The market for power generation improved slightly in 2021 compared with the previous year. Overall, there are initial signs of market recovery; however, due to factors such as CO2 reductions, a great deal of hesitancy remains regarding investment decisions. The trend away from oil-fired power plants toward dual-fuel and gas-fired power plants continued. Demand for new energy solutions remained high with a strong trend toward greater flexibility and decentralized availability and a particular focus on hydrogen technologies. The strong competitive and price pressures remained unchanged due to the ongoing negative effects of the Covid-19 pandemic.
Compared with a year earlier, the turbomachinery market recovered significantly from the negative impact of the Covid-19 pandemic. Prices for raw materials continued to increase significantly, resulting in rising demand for production facilities with turbo compressors in the raw materials and processing industry. The new business fields for turbomachinery used in the area of decarbonization expanded significantly on the prior year, driven by greater investment and markedly higher prices for carbon dioxide certificates in European trading. However, demand for steam turbines used for power generation and gas turbines used for decentralized, industrial combined-heat-and-power installations declined and deteriorated slightly year-on-year due to the shift in the focus of investments by electricity producers to the field of renewable energy.
The after-sales business for diesel engines continued to be adversely affected by the Covid-19 pandemic and remained at the prior-year level. The Covid-19 pandemic and the associated cash-flow difficulties on the part of customers reduced demand for standard products, and decisions about capital-intensive modifications were delayed.
Compared with 2020, the after-sales business for turbomachinery saw an initial recovery from the negative effects of the Covid-19 pandemic, especially in the second half of the year. However, it did not yet match the pre-crisis level.
TRENDS IN THE MARKETS FOR FINANCIAL SERVICES
Demand for automotive financial services was buoyant in 2021 due, among other things, to the persistently low key interest rates in the main currency areas. Nevertheless, the Covid-19 pandemic and the limited vehicle availability due to the semiconductor shortage put pressure on the demand for financial services in almost all regions. Overall, a continuing shift from financing to leasing is being observed. Demand for mobility services in the retail and business customer segment increased. These services focus on the use rather than ownership of an automobile, for example car subscription models. There was also a moderate increase in demand for service products such as maintenance and servicing agreements or insurance, given that they allow customers to calculate total operating costs.
The European passenger car market was increasingly affected in the reporting period by the impact of the semiconductor shortage; vehicle deliveries were slightly below the prior-year period, which had been weak due to the pandemic. New contracts for financial services products in the new vehicle business reached the prior-year level in this still difficult market environment. A positive trend was recorded in the financing of used vehicles; here particularly sales of after-sales products such as servicing, maintenance and spare parts agreements were up substantially on the previous year’s level.
In addition to the impact of the Covid-19 pandemic, the financial services business in Germany increasingly faced the challenges presented by the semiconductor shortage over the course of 2021. Deliveries of new vehicles declined, which in turn also resulted in decreasing vehicle availability in the used vehicle market. Nevertheless, the number of new contracts for new vehicle leases among both retail and fleet customers increased compared with the prior-year period. In contrast, the number of new financing contracts for new and used vehicles and direct business were down on the previous year. New vehicle penetration exceeded the very good prior-year figure. Apart from a few exceptions, the number of new contracts for services and insurance products was down.
Demand for financing and insurance products for new and used vehicles in South Africa persisted at the previous year’s level, continuing to be bolstered by campaigns, vehicle price inflation and persistently low interest rates. Financed vehicle purchases, however, remained difficult overall in light of the subdued economy and continuing pressure on disposable income.
In the North America region, the semiconductor shortage increasingly weighed on vehicle deliveries, although they exceeded the prior-year level. In the United States and Mexico, both the proportion of lease and financing contracts in percentage terms and the absolute number of contracts were down on the prior-year figures. In Canada, the proportion of lease and financing contracts in percentage terms was down on the prior-year figures; however, the absolute number of contracts increased. Demand for automotive-related after-sales products was up on the previous year throughout the entire region.
In the South America region, excess demand for new vehicles and a sharp rise in interest rates in Brazil led to a growing number of cash sales. As a result, the number of financing contracts decreased year-on-year. Demand for long-term leases rose, also among private customers. Sales in Argentina increased through car savings plans.
In the Chinese market, both the share of loan-financed vehicle purchases and growth in new contracts tapered off in 2021 owing to the persistent semiconductor shortage and the related drop in passenger car sales. As a result, the comparative prior-year figures were not reached in the reporting period.
The commercial vehicle market, which was heavily affected by the Covid-19 pandemic in the previous year, recorded a recovery compared to the prior year, particularly due to growth in the heavy commercial vehicles category. This positive trend was also seen in financing and lease contracts for heavy commercial vehicles in Europe and Brazil.