Car parts and vehicles are Germany’s biggest exports by an enormous margin, according to MIT’s Observatory of Economic Complexity. However, the auto market is showing weakness in 2019, and in the short term, we expect the industry’s sales and profits will be some of the most affected. For one thing, the auto market is especially susceptible to macroeconomic trends. Also, cars are major investments for most consumers, and sales suffer if potential buyers feel generally uncertain or pessimistic. Even though consumers in Germany are relatively confident, consumer sentiment in other parts of Europe, where many German cars are sold, is less optimistic. Signs of a possible recession in Germany in Q3 2019 will also weigh on the automotive sector.
We estimate that the German auto industry’s digital ad spend grew 11.4% in 2018, while total ad spend was up 11.6%. In other words, automotive was one of the highest-spending industries, but it underperformed the total market with respect to growth. We believe similar conditions will prevail in 2019, leaving digital ad budgets for auto companies flat compared with 2018.
Automotive brands have always spent more on ads destined for larger screens, including TV as well as desktops and laptops, because it’s important to convey vehicles’ interior and exterior details. So it’s no surprise that in 2016, for example, desktop/laptop formats accounted for more than 61% of all digital ad spending by auto brands. In 2019, though, auto ads on desktops and laptops will claim just 47.3% of digital ad spending by those brands. At the same time, auto industry spending on desktop/laptop ads will continue to rise, in absolute terms, and as a share of all spending on desktop/laptop ads.