R+D investments remain high – premium is of strategic importance
Wissmann: We will emerge from the crisis with innovative products
Frankfurt am Main/Stuttgart, 12 May 2009. "It will only be possible to get out of the crisis with innovative and attractive products. Anyone who uses the crisis as an opportunity to concentrate on ‘going cheap' will be making a fatal mistake. The customers continue to make high demands of their vehicles - and the EU's environmental standards will also remain high in the future. The same applies to safety standards, where the German manufacturers in particular are setting the standards worldwide," stressed Matthias Wissmann, President of the German Association of the Automotive Industry (VDA), at the 20th Automobile Forum in Stuttgart.
Wissmann added that the challenges facing the automotive industry were huge: "We have to keep the investments in research and development at a high level, while the sales figures remain depressed this year and probably in the coming year, too. This will tend to lead to higher costs per unit. Therefore the companies have not only to maintain their lead in innovation, but at the same time also to optimize their cost structures in order to remain competitive. This is going to increase the pressure in the industry even further," Wissmann underscored.
"The way to respond to this situation is through production and development, by means of standardization, modularization and modular systems. This applies to the whole powertrain just as it does to many other areas concerning automobiles. Intelligent solutions are required that both increase the benefit to customers and reduce costs. For example, in standardization the most important aspect is the components and systems that are irrelevant when it comes to brand differentiation by customers. On the topic of standardization, the heads of development at the manufacturers and suppliers are all pulling in the same direction in the VDA's Working Groups," the VDA president explained. Further diversification of the range of models - as planned by many manufacturers - will be backed up with modular components that keep the input required lower in relation to the higher number of models.
Wissmann went on to say that as German vehicle producers and their suppliers push forward innovation, they will be focusing on the decisive goal of sustainable mobility. "In recent years we have already reduced the emissions of ‘classical pollutants' to such an extent that today one can only speak of ‘homeopathic doses' in the vehicles' exhaust," he continued. And just how seriously the German automotive industry takes climate protection was shown clearly by the enormous progress already achieved in reducing CO2 emissions. Today German brands have about 90 models on offer that consume less than 5 l of fuel to travel 100 km. And the companies are speeding up their progress in reducing the CO2 output of their new models. In 2007 the average CO2 value of all newly registered passenger cars in Germany came down by 1.7 per cent, and then in 2008 the CO2 values were reduced by another 2.9 per cent. In the first quarter of 2009 a reduction of 5.9 per cent had already been achieved in comparison to the same period last year. The average CO2 value of the newly registered vehicles in Germany therefore came to 154.9 g/km - much less than 160 g CO2/km. Wissmann stressed, "The German brands are making a decisive contribution to this development. Despite their focus on medium-segment and premium vehicles, they are now only 2.5 percentage points above the average."
The VDA president pointed out the positive effects on the economy as a whole that were triggered by reforming the vehicle tax and by the scrapping bonus: "This strategy is an economic-policy success that will benefit not only the employees in the automotive industry but also the thousands of people working in all the sectors supplying products to our industry. It stabilizes the domestic market, which is especially important in view of the continuing weakness of the export markets. It gets customers into the showrooms who have never bought a new car before. And it has given a considerable boost to business in year-old cars. Furthermore, the ecological effect is unmistakable, as the falling CO2 emissions of newly registered vehicles show."
"Anyone following the market trends in the neighboring European states can easily imagine how critical the situation would be on the domestic market - and therefore also on the labor market - if politicians had not reacted with such speed and determination to implement these effective instruments for reviving demand," Wissmann said.
The VDA president expected the incentive programs now introduced in many other European countries would also have the intended impacts and at least put the brakes on any further downturn, "so that the conditions for exports improve again." However a sustainable recovery of the global automotive market would, he said, only appear if the important US market gets into gear again.
Wissmann stressed the importance of the premium segment to Germany as a vehicle-producing country, and to Baden-Württemberg in particular. In the last ten years the proportion of premium brands in domestic production had risen from 40 to 50 per cent, while the volume of exports had likewise increased by 10 percentage points to 50 per cent in the same period. Wissmann: "This means that half of all cars produced in or exported from Germany are premium vehicles." Over the last ten years sales of premium products had actually doubled to 90 billion euro. Premium vehicles accounted for almost two thirds of this key industry's turnover, he said, adding that the value of exports had shown an even stronger rise and reached over 140 per cent.
Wissmann stated that the premium segment was of strategic importance, especially for employment in Germany. In the last decade overall employment levels at automobile manufacturers had fallen slightly (down by 2 per cent), but the premium segment had expanded by 12 per cent. Wissmann: "Six out of ten employees at the manufacturers in Germany depend directly on premium vehicles, whereas ten years ago the figure was just over half." And recently the largest CO2 savings have actually been made in premium products. For example, the new Mercedes-Benz E-Class Coupe consumes only 5.1 l over 100 km - a figure that has never been achieved before in this segment. "And if, on top of this, performance can actually be enhanced, even though the car has a four-cylinder engine (with lower consumption) instead of a six-cylinder one, it once again points up the innovative strength of our industry," Wissmann said, adding that progress was not limited to one brand or one manufacturer. There were good examples to be found at Audi, BMW and Porsche, he said.
Premium vehicles play an equally important role in the topic of safety. The VDA president emphasized, "From ABS to the brake assist system, side airbags, ceramic brakes, proximity control, knee airbags, active forward lighting and infrared night vision systems, all of these innovations were initially installed in premium vehicles before they found their way into the volume models."
Wissmann stressed: "However difficult times are, I am convinced that this industry will emerge from the crisis stronger than others because we are staying on course - despite the severe headwind - and are consistently pursuing our innovation strategy. There will not be any cuts in research and development. And another thing is also clear: when the international markets start recovering, the German manufacturers will be right at the forefront of the upturn because they are in a better global position than any of the others."