'German auto industry to recover slowly in second half after pandemic hit'

Germany's auto industry association said on Tuesday it was optimistic for a recovery in the second half of the year after being impacted by the coronavirus pandemic, but warned the industry's problems were complicated.

"We are cautiously optimistic for the second half of the year, that we will see an upturn and that there will be some catch-up effects," VDA President Hildegard Mueller told ZDF television.

The industry has been hit hard by the closure of stores and showrooms and restrictions around the world to curb the spread of the novel coronavirus since early 2020.

A global shortage of semiconductors that has forced automakers to shut assembly lines will slow the industry's recovery, as analysts see the chips shortage persisting for as long as six months.

Mueller said she didn't see a short-term fix for the semiconductor bottlenecks.

The association expects the German passenger car market to grow by around 8% this year to 3.15 million vehicles, but sales will remain below the pre-crisis level of around 3.5 million vehicles, it added.

"There is no basis for all-clear," Mueller later told journalists at its annual conference on Tuesday.

Passenger car sales in Europe are seen growing by 12% to 13.4 million vehicles and by 9% in the U.S. this year, VDA said.

The Chinese market will already exceed pre-pandemic sales in 2021, VDA said, forecasting an annual growth of 8% to 21.4 million vehicles.

Muller said the German auto industry's shift towards electro-mobility and digitisation continued despite the pandemic, with around 150 billion euros invested in future technologies by 2025.