German car buyers shrug off Brexit fears

October 13, 2016

Uncertainty about the impact of Brexit has dented consumer confidence in Germany, but not enough to discourage them from spending on major items such as new cars. Overall customer sentiment has been declining slowly for the past quarter, according to a monthly consumer climate study from GfK, with further declines expected during October. Brexit is one of a number of factors affecting confidence, along with concerns over recent terrorist incidents. The drop will not impact consumer spending because confidence has been at such a high level that a slight decline is not enough to cause buyers to postpone purchases. The concerns reflect the long-term outlook of businesses, which are uncertain about the eventual outcome of Brexit negotiations. Last year, German companies exported an estimated €89 billion of goods to the UK, making it their third most important export destination. Following the Brexit vote, the German Chambers of Commerce and Industry said it expected a 1% fall in exports to the UK this year compared to 5% growth predicted before the Brexit vote. In 2017, it expects a 5% fall in exports to the UK. In the short-term, the German economy remains strong, which has supported growth of around 6% in the German car market for the year to date. Sales could reach a seven-year high of 3.3 million by the end of 2016. Private registrations reflect ongoing consumer confidence, as they are up more than one-fifth during 2016 compared to the same period in 2015.

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