One in seven jobs in Germany is some way – directly or indirectly – linked to the car industry.
As they say: If BMW gets a sniffle, Bavaria gets the flu”.
The German government – as part of a fairly chunky economic stimulus programme – came up with the idea of pitching in with €2500 if you junk your (more than 9 year old) car and buy a new (low emission, Euro Cat 4) one.
I looked at the numbers (as did a few of the serious newspapers) and figured (along with them) that it was a non-goer.
If you do the math over a 5 year period (capex, factoring in depreciation, repairs etc) you’re way better off keeping your old clunker and running it into the ground.
And I also figured that folks who are driving around in a car that’s worth less than €2500 wouldn’t necessarily be in the core new-car-buyer segment in the first place.
How wrong we all were.
Queues in front of car dealerships didn’t QUITE reach around the block, but not far off and some very happy-looking sales people popped up on the box. Especially if you’re selling Dacias (especially Dacias – €7500 after the rebate…) and anything from Italy, France, Spain or Korea.
This chart pretty much explains it.
If the national household savings rate has averaged 10% over the last 10 years, a lot of folks will have an annual salary tucked away somewhere, just waiting for a rainy day. (And if you think that the USA looks badly off, you haven’t seen the values for the UK. Or Australia)
Now, it’s not actually pouring (yet), but when the Tipping Point kicks in, things take off.
Unless of course you’re trying to sell BMWs, Audis or Mercedes.
Most of their production goes overseas to places like the USA, the UK and Australia.
Where folks don’t appear to have saved even 2 cents to rub together.