Petrotahlil --Germany’s auto production is expected to fall 25% to 3.5m units this year, and domestic new-car registrations are expected down 23% to 2.8m, the country’s auto industry trade group VDA said in a forecast on Friday.

While production and domestic new-car sales would recover in the second half, the recovery would not come “even close to offsetting the unprecedented collapse” in H1 caused by the coronavirus pandemic, the group said.

H1 2020 auto data

Source: VDA

Full-year 2019 registrations stood at 3.61m and production was 4.66m, according to VDA’s website.

Despite the sharp production decline, Germany’s auto industry employment is currently down only 3% year on year to 814,000, the group said.

However, about half of auto industry workers were still on short-time working, the group said and warned of more job losses.

“The massively lower production has serious consequences not only for manufacturers, but especially for the many medium-sized suppliers,” said VDA president Hildegard Muller.

"We have to assume that the number of employees will continue to decrease through the end of 2020," she said.

As a way out of the crisis, Muller called for an “ambitious EU industrial policy package” that must include the build-up for electric vehicle (EV) and hydrogen fueling infrastructure.

The auto industry, for its part, needed to offer an “intelligent mix” – ranging from EVs to low-emission gasoline and diesel vehicles, she said.

She stressed in particular the role of plug-in hybrid vehicles – which offer both emissions-free driving for short and medium distances, as well as the necessary range and efficiencies needed to drive long distances.

Transport requirements differ between cities and countryside, , for example.

“That is why it is important to use the best solution in each case, to take people's realities into account and to be open to technology when it comes to future mobility,” she said.

In related news, Munich-based research group Ifo this week also forecast that while Germany's auto sector would recover in the second half, the recovery would be slow.

The automotive industry is a major global consumer of petrochemicals, which make up more than one-third of the raw material cost of an average vehicle.

Several chemicals have a significant percentage of their demand tied to the global auto industry. They include nylon resins, styrene butadiene rubber (SBR), polypropylene (PP), acrylonitrile-butadiene-styrene (ABS), polymethyl methacrylate (PMMA), and polycarbonate (PC).