'IC-Market Monitor Panel® Windows in Germany 2001' Published by InterConnection
Light and Shade in the German Window Market: Turnover Falling, Prices
Continuing to Rise
2001
has been the worst turnover year for the German window market in over
10 years; since the absolute peak in 1995, with over 26 million units
sold, the market has continuously declined; 2001 brought another decrease
in volume of -12.8% to about 18.5 million units, as the latest report
by the consultants of InterConnection shows.
The decline in renovation, which in the last few years had compensated
for decreases in orders for new construction, was especially painful for
the market. The number of windows used in renovating older buildings has
gone down again by 11.7% after the bad year 2000 (minus 14.2%). As in
the previous years, non-housing did better than housing. While the market
for windows in the private sector (one- and two-family homes) went down
by 15.8%, the decrease in the object segment (multi-level buildings and
non-housing) was significantly less, at -10%. Considering that the object
segment of multi-level buildings is experiencing a historical low, in
the segment office and business buildings there has even been market growth
- a ray of light which will mainly benefit those who offer fronts and
aluminium systems.
In Germany, 326.000 dwellings were completed in 2001, which corresponds
to a decrease of 22.9% as compared to the previous year. The segment which
suffered most was multi-level housing, which declined by 27%. Many experts
assess the current volume of new housing in Germany as 'clearly undervalued',
similar to a business enterprise on the stock market whose cumulative
market capitalisation is below the value of the assets owned by the enterprise.
Due to demographic development, the German market will require an annual
volume of 350,000 and 400,000 new apartments until the year 2010; the
current trend in building permits for housing (in 2001 only 290,000 permits
were issued) is moving further and further away from this volume. It should
thus be expected that when the economic motor revs up this volume will
need to be recovered, and this may result in a race. Non-housing did considerably
better, and only just under GNP-growth: the volume of non-housing completed,
measured in terms of space, only decreased by -0.6% in 2001, while in
the office and administrative building sector an increase of 13.0% was
achieved.
While the window market has decreased by -12.8% in terms of volume, the
decrease in value in 2001 was 'only' 10.6%. This small ray of light has
two reasons: first, the share of office and business buildings in the
window market has increased, which means that more expensive aluminium
systems are being used. Secondly, many industrial providers of PVC and
wood-and-aluminium windows have pulled the 'emergency brake' this past
year and increased prices, sometimes twice, by up to 5%. This strategy
has proved to be absolutely correct, even if it meant the loss of a few
announcements for companies. The price level in the German market, due
to excess capacity and competition resulting from it in 2000, has reached
its lowest level. In the face of continuous increases in wages and material
costs, this gap could no longer stay open. Continuous development of windows
as a product and continuous innovation have enabled more high-quality
products to be sold than ever before. The average price of PVC-windows
sold in the German market in 2001 has increased by 2.7%, prices of wood-and-aluminium
windows have risen by 1.1% and prices of aluminium windows by 3,3%. Only
the wood-window sector experienced another decrease of -1.4%. Unfortunately,
a lot of enterprises have recently gone bankrupt which, contrary to business
logic, tried to achieve greater market share by further price dumping.
In the case of frame materials, the market share of PVC windows - hit
especially hard by the decrease in spending on modernisation - has stabilized
at 51.3% in terms of volume. The market share of wood windows decreased
again and is now 23.0%. In spite of a difficult market environment, wood-and-aluminium
windows were able to increase their market share and now have 5.6% of
the total market. The winners of the year were the aluminium windows,
which due to the positive development of the office and business market,
were able to increase their share of the total market to 20.1%.
The development of the market is also reflected in the distribution channels:
the number of windows sold by announcements has risen to 11.2%, but window
sellers also increased their market share slightly, to 35.5%. Direct sales
decreased to 47.8% of the total market, as did distribution via construction
stores with a market volume of 5.5%.
The predictions for the development of the German window market until
2004 bring both good and bad news: due to the decreasing demand for apartments
- which is already at an unrealistic level - a decrease in volume in the
market for windows used in new housing is also to be expected by 2004.
Economic experts currently assume GNP growth of only 0.8% for Germany
for 2002, in 2003 a considerable growth spurt of 2.5% is expected again.
If these predictions come true, growth can be expected again in Germany,
especially in non-housing. The effects of energy-saving legislation will
slowly start to take hold, which should decrease the heating costs of
new buildings by about 30%, thus enabling use of higher-quality products.
Altogether, the consultants of InterConnection expect that by 2004 the
German window market will decrease in volume by another -7.4%; but the
decrease in value will only be -2.4%. The divisions within the country,
however, are still clearly visible: while the window market in the East
will decrease by another 24.4% by 2004, the West (Hessen, Nordrhein-Westfalen)
is already experiencing what can be called consolidation, with a minus
of 0.7%, and in Bavaria there is even growth expected of 2.2% by 2004.
The 'IC-Market Monitor Panel ® Windows in Germany 2001' is a detailed
market and sector analysis of the German market. It contains market figures
in volume and value for the years 1996-2001 and predictions of development
until 2004, detailed sales and turnover figures as well as market shares
of the TOP-40 suppliers in Germany. The study is now available from the
InterConnection Consulting Group.
'IC-Market Monitor Panel ® Windows in Germany 2001'
Issue: April 2001, Size: 350 Pages, Price: E3.900
Contact: Martin Bergant
Tel: +43(1)5854623-13
Email: mailto:bergant@interconnectionconsulting.com
Web: http://www.interconnectionresearch.com