While the world still holds its breath and wonders whether or not it will have to go through the infamous ‘double-dip’ recession, one mature market is defying all the odds with an economic recovery of its own.
Germany has just posted extraordinary numbers for the second quarter showing its economy grew by 2.2% – the largest such rise for 20 years – and which if translated to full-year figures of nearly 9% would see the country enjoy growth that would make the bean-counters in Beijing sit up and take notice (Interestingly, China apparently has just overtaken Japan to become the number two economy in the world).
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Nonetheless – despite the good news – and some analysts have predicted the government could take an extra EUR11bn (US$14.1bn) in revenue for 2010 – the German administration is preparing for some pretty hefty austerity cuts to its budget later this year.
Much of the boom has been export-driven with the ‘Made in Germany’ slogan appealing to – particularly – BRIC countries whose appetite for top-end products is soaking up a lot of faltering domestic automobile demand.
But closer to home those budget cuts – in much the same way as the rest of western Europe – will still happen despite the extra cash flowing into German coffers.
Consequently customers at home in Germany continue to batten down the hatches, repaying debt and casting a weather eye on the government’s belt-tightening.
Only yesterday (16 August) Volkswagen warned of challenging conditions on the domestic front, with demand falling nearly 30% and its own Group performance dropping almost 19% to 606,000 units.
The ending of the scrappage scheme has clearly had an effect on German consumers, with a visit to the showroom put off until the economy shows tangible signs of domestic improvement.
German auto manufacturers – replete with an array of world-class products – will have to find a way to make their goods more attractive to their countrymen, either through simple price tweaking or a more subtle cocktail of advertising, marketing and perhaps an appeal to the green attributes of their products.
In many ways, Germany has led the way in Europe and arguable the west in general, in green initiatives for decades. Germany was recycling way before any other country and has been streets ahead in the environmental field.
Perhaps car manufacturers can now use that green vast experience – practically wired into most Germans – to market – and produce vehicles that can sell as well in Berlin as Beijing.
