The downturn of the German window market in 2007 exceeded many expectations.
In 2008 recovery will follow but only on a moderate level (about 1% growth in terms of quantity), according to a new study by Interconnection Consulting on the window market in Europe.
The boom of the German window market has been taken for granted too early in 2006. The market growth of 6,4% in terms of quantity emerged as a flash in the pan, as a result of rise in VAT. The year of 2007 was horrible: the slump of 7,4% in terms of quantity was affected directly by the cancellation of the government subsidy for condominiums. . Additionally, the increase in VAT hurt the private renovation market significantly. Building permits in residential sector broke down by 12,9%. Although the non-residential sector developed nicely, residential construction took such a deep dip that the market in total suffered a massive downturn.
2008 and in the coming years recovery will follow, but only at growth rates of 1%. The growth driver is still the non-residential sector, while the residential sector will need much more time to improve. With the consumption of 128 window units per 1.000 inhabitants Germany ranks behind Russia and Czech republic in European comparison.
Metal wins, PVC hurts
The variable development in the residential and non-residential segments is mirrored in the market shares of materials. While metal windows, more in use in non-residential construction, showed good performance with increasing quantity, PVC took the hardest blow: -14 % in quantity set PVC back to a level even below that of 2005. The smallest segment, combination windows, performed very well and grew by 10% in quantity.
Atomized Market
The German market lacks dominating leaders. Top 10 window producers account for 22% of total market. Brand names are also not common, though the price is often the decision maker. The industry could not transfer the steadily increasing prices of raw materials to the end consumers.
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