Germany’s car service business increased slightly in 2010

The sales and service business of the German car industry shrank 3.2 pc in 2010 top 130 billion euros, but dealer margins actually increased a bit.

The decline in sales was triggered by a 12.5 pc drop in new-car sales to 52.15 billion euros. By contrast, commercial vehicle sales jumped 30 pc to 5.7 billion euros, while second-hand commercial vehicle sales rose 9.2 pc to 3.6 billion euros.

Business volume also rose in the service area, with sales increasing 3 pc to 29 billion euros.

Despite the decline in new-car sales, car dealerships boosted margins. "On average, return on sales was between 1.3 pc and 1.5 pc," said Robert Rademacher, president of the ZDK, the German trade association representing 38,300 car sales and service businesses.

Rademacher said most businesses were more optimistic about 2011, with 33 pc characterizing the first quarter as "good" and 52 pc as "satisfactory."By comparison, in the first quarter of 2010, 52.6 pc of them had characterized business as "bad."

As the number of dealerships continues to decline in Germany, the total shrank to 38,050 by year end, down 250 from a year earlier.