New car output in sharp decline

German production of passenger cars was down 3.1% to 5.5 million units with a further fall of 0.6% to 5.3 million units of German owned car companies manufactured outside Germany. Production of premium value cars with a higher percentage leather content saw a steeper fall in 2008 and the situation has become worse in 2009.
Approximately 17% of the entire world production is produced by German companies (including non-German plants). Total passenger car production worldwide fell 5% to 57.5 million units with the USA (-19% to 8.5 million), France (-9.8% to 2.3 million) and Spain (-12.8% to 2 million) being the main losers. Japanese production remained stable up to the end of 2008 (-0.9% to 9.9 million) but that is no longer the case and production has been scaled back this year. Only China increased automotive production in 2008, which was up 5.5% to 5.7 million units. Output in other major car producing countries such as Italy, South Korea, the UK and South Africa is also down.
The outlook for this year remains depressed as German car production output fell by a massive 34% in January and a further 47% in February (exports fell by 51% in February).
The German Leather Federation also notes that as a general trend car seat production is shifting away from Germany to Eastern Europe and Asia with major first tier suppliers expected to follow.
As well as the governmental fiscal payments to many manufacturers in the USA and Europe, the German government is assisting purchases of new cars by providing incentives to scrap older models. However, this is likely to benefit small and medium sized cars and not the high value end where leather is more routinely specified.