German car market won’t grow in 2012, industry association says image

The German auto-industry association VDA today said Europe’s largest car market won’t grow next year due to Europe’s sovereign debt crisis.

VDA (Verband des Automobil Industrie) expects 2012 sales to remain at 3.1 million units after rising about 8 percent this year. German carmakers are expected to make no more cars than last year, at 5.9 million units. “We are expecting more headwinds. 2012 will be a hard year,” VDA president Matthias Wissmann was quoted as saying by Bloomberg. German automakers are preparing for a slowdown in demand, with DIW research institute going as far as predicting the German economy may enter recession over the next two quarters.

BMW said it is prepared to reduce production by as much as 30 percent, while archrival Daimler said its production flexibility will enable it to „react quickly to future developments.” The western European car market is likely to remain at 12.8 million vehicles next year, on condition the economy remains stable. VDA doesn’t rule out a slight decline if tensions on financial markets don’t ease.

“We’re confident overall for 2012, if financial markets are stabilized and the European debt crisis gets under control,” VDA president said.