The German automotive industry anticipates a modest two percent rise in new car registrations by 2026, a figure that underscores the ongoing fragility of the sector despite projections of a slight recovery. According to a forecast released by the German Association of the Automotive Industry (VDA) and reported by the Rheinische Post, the rebound remains significantly below pre-crisis levels of 2019, with an expected 2.90 million new registrations – approximately one-fifth less than the pre-pandemic benchmark.
The continued economic weakness is identified as the primary obstacle to a more robust revival. While electric vehicle (EV) adoption is projected to increase, with nearly one million (979,000) new registrations in 2026, representing a 17 percent jump from 2025, this growth hinges on swift and decisive action from the German government. The VDA explicitly states that the prospective federal EV subsidy program must be rolled out rapidly and transparently, warning that uncertainty amongst consumers, businesses and dealers will stifle the nascent positive momentum currently observed in the EV market.
The outlook isn’s uniformly positive across vehicle types; battery electric vehicles (BEVs) are predicted to gain 30 percent to 693,000 units, while plug-in hybrids (PHEVs) are slated for a five percent decrease to 286,000 after a surge in 2025.
Challenges extend beyond domestic sales, with export markets also facing headwinds. Europe is expected to see a modest two percent growth to 13.4 million vehicles, while China, despite a complex operating environment, is projected to achieve a one percent increase to 24.5 million units, highlighting a stark contrast with Europe’s continued struggle. “While Europe remains anchored to historically low levels compared to pre-crisis times, China is achieving a new record high” stated VDA President Hildegard Müller.
The US market, conversely, is forecasted to experience a significant four percent decline in new registrations as a result of increasing protectionism and associated costs. Müller cautioned that German automotive companies “will clearly feel the impact” of this trend.
Despite a slight predicted one percent decrease in domestic car production to 4.11 million units, overseas production of German brands is projected to rise by one percent to 9.2 million vehicles. Furthermore, the volume of electric vehicles manufactured in Germany is expected to experience a further five percent increase, contributing to a total of 1.76 million EVs rolling off German production lines in 2026 – solidifying Germany’s position as the world’s second-largest EV production hub.
The VDA is now strongly advocating for the European Union to reconsider its stringent 2035 combustion engine ban, emphasizing the need for “timely and clear decisions” from Brussels to ensure the long-term viability and competitiveness of the German automotive industry. This call for flexibility underscores the precarious balance between environmental goals and economic realities facing the sector.