New car sales in Germany nosedived in January as virus restrictions and the end of a VAT sales tax reduction stifled demand, official data showed Wednesday.
A total of 169,754 new cars were registered last month in Europe’s largest car market — down 31 percent on January 2020, the KBA transport authority said.
The plunge was caused by “car dealerships being closed due to the pandemic and the VAT rate,” according to the German Automobile Association (VDA).
The German government had reduced VAT for six months from July to stimulate spending during the virus outbreak, with the new year seeing a return to the higher rate of 19 percent.
The cut led to a spike in car sales in December, with new registrations jumping 10 percent year-on-year.
But overall in 2020, Germany’s key car market plunged to its lowest levels since reunification, with output and sales down dramatically due to the coronavirus pandemic.
A total of 2.9 million cars were registered in the country last year, down 19 percent, with production of 3.5 million vehicles reaching the lowest in 45 years, according to the VDA.
But there was good news for electric cars in January, with new registrations rising by 129 percent to 36,903.
Electric vehicle sales represented 21.7 percent of the total market, according to the VDA.
Sales of purely electric cars increased by 118 percent, while new registrations of plug-in hybrids rose by 138 percent.
Including hybrids, e-vehicles accounted for 13.5 percent of new registrations in 2020.