The German automotive industry anticipates a modest two percent rise in new passenger car registrations by 2026 compared to the previous year, according to a recent forecast from the German Association of the Automotive Industry (VDA). This projection, reported by the “Rheinische Post” underscores the persistent headwinds facing the sector despite ongoing efforts to spur electric vehicle adoption.
While the forecast suggests a slight uptick, the VDA emphasizes that the German car market is not poised for a substantial recovery. Estimated registrations are projected to reach 2.90 million units in 2026 – still roughly a fifth below pre-crisis levels seen in 2019. This muted growth primarily reflects the ongoing economic fragility impacting consumer spending and investment.
Electric vehicle (EV) adoption is expected to see a comparatively stronger, though still cautious, expansion. The VDA projects registrations of nearly one million EVs (979,000) in Germany by 2026, representing a 17 percent increase from 2025. This uptick is predicated on the swift implementation of planned government incentives for electric vehicle purchases. The VDA cautions that any delays or uncertainty regarding these support mechanisms risk stalling the current positive momentum observed in the EV market, prompting consumers to defer purchases.
The industry has been grappling with a confluence of challenges for years, including the impact of US tariffs, difficulties penetrating the Chinese market, the immense costs associated with transitioning to climate neutrality, high energy prices and generally hesitant consumer confidence across Europe. Consequently, the sector is lobbying in Berlin and Brussels for a relaxation of the EU’s current stringent regulations concerning an internal combustion engine (ICE) phase-out scheduled for 2035.
Further complicating the picture is the performance of export markets. The VDA anticipates tepid growth in international passenger car markets; Europe is projected to grow by two percent to 13.4 million vehicles, while China is expected to see a minimal one percent increase to 24.5 million units.
The stark contrast between Europe’s continued struggle and China’s record-breaking sales despite economic challenges was highlighted by VDA President Hildegard Müller. Müller pointed to the impact of “increasing protectionism” in the US, forecasting a significant four percent decline in new car registrations, emphasizing that this will not be without consequence for German automotive companies.
The forecast predicts a slight one percent decline in domestic German car production, reaching 4.11 million units. Conversely, overseas production of German brands is projected to increase marginally, by one percent, to 9.2 million vehicles. Production of electric vehicles within Germany is expected to continue its upward trajectory, with a five percent increase anticipated, resulting in an estimated 1.76 million electric vehicles rolling off production lines – solidifying Germany’s position as the world’s second-largest producer of EVs.
However, the long-term viability of the German automotive sector remains closely tied to a decisive and pragmatic approach from Brussels regarding the future of internal combustion engines. Müller reiterated the urgent need for “clear decisions” from the EU Commission regarding the phasing out of combustion engines, emphasizing that continued uncertainty risks undermining decades of investment and innovation.
