11th Annual "Innovative Suppliers" Conference in Audi Forum, Ingolstadt – The Stategic Significance of the Premium Segment
Wissmann: Banks and insurers must guarantee access to credit
Frankfurt am Main/Ingolstadt, June 24, 2009. Matthias Wissmann, president of the Verband der Automobilindustrie (VDA), called on public and private banks to continue to fulfil their overall economic responsibility in the crisis. "In the case of the automobile industry, especially our suppliers, this goal has only partially been fulfilled. Some of our companies have to fight for credit, are subjected to credit line restrictions and have received less favourable conditions", said Wissmann at the 11th annual BAIKA- " Innovative Suppliers" Conference in the Audi Forum in Ingolstadt. "In the current situation what is needed in fact is a broadening of credit lines. Some banks are just not engaged enough, although in the framework of the stimulus program the KfW is assuming a greater part of the risks." The protective umbrella opened by federal government for the credit institutions is not completely fulfilling its purpose. Therefore it is a political matter to exert the needed pressure on the banks, the VDA president emphasized .
Wissmann similarly assessed the situation in the area of trade credit insurance. "We have been trying to explain to the German Insurance Association as well as the individual trade credit insurers, that they should not make a blanket negative decision about the automobile sector, but should make decisions only on a case by case basis." It is absolutely necessary that the trade credit insurers revert to a realistic judgement, according to Wissmann. The VDA therefore welcomes the fact that in the framework of the loan guarantee program the federal government is now considering a protective umbrella for the trade credit insurers. "We can only hope that in light of this support that the insurers will again be ready to make active business decisions."
The firms that are strongly oriented to innovation, including the mostly medium sized supplier companies and the commercial vehicle industry are especially feeling the brunt of the lack of credit, said Wissmann. The situation here is almost dramatic. For instance the export of trucks up to 6 tons dropped 65 percent in the last year, while heavy commercial vehicle exports dropped 68 percent - in May alone it was about 77 percent. In Germany new transporter registrations through May lagged behind the volume last year. In the over 6 ton category the income dropped by about 30 percent last year.
Wissmann: "Serious investment insecurity in the transport and logistic branch is causing a dwindling demand in the commercial vehicle market." This pertains primarily to the business relations between individual firms, the "B to B" business. The firms are only prepared to make longer term investment decisions in a stable environment with clear rules and calculable risks,. "The automobile industry sees a great need here for political action ",Wissmann said.
At the Audi Forum conference - one of the leading international meeting points for the automobile sector - the VDA president underscored the significance that premium passenger vehicles cars have in the German automobile market. The domestically produced premium brand component rose from 40 to 50 percent in the last ten years, while the premium brand export volume also rose by about 10 percent to 50 percent. Wissmann: "That means that every second automobile that is produced or exported from Germany belongs to the premium segment." The sales from this segment have doubled over the last 10 years to 90 billion Euro. Just under two thirds of the income in this key industry is thereby derived from sales of premium vehicles. At more than 140 percent, the export sales rose even more.
The premium is also strategically important for employment in Germany. While total employment among the manufacturers over the last ten years declined slightly by 2 percent, the premium sector added 12 percent to the employment rolls: "Six out of ten who are employed in Germany by the manufacturers, are directly involved with premium vehicles. Ten years ago it was a little more than one out of two." The greatest CO2 savings have been achieved in premium products in the last period. And, in spite of the fact that a
4 cylinder engine consumes less than the previous standard 6 cylinder engines, it delivers even more output. That says something about the strength of innovation of the German manufacturers and suppliers.
The subject of safety is just as important in the premium segment. "From ABS to brake assistance, side airbags, ceramic brakes, adaptive cruise control systems, knee airbags, active curve illumination and infrared night vision systems - these innovations were always available at first in premium vehicles, before they made their way into mass production models ", the VDA president pointed out.
Wissmann emphasized: "2009 is the hardest year in the history of the automobile -industry. But we are confident, that all long-term prognoses agree: The automobile will continue to be a growth market, a spur for innovation, and a key industry. And the prognoses also say that the German automobile industry, manufacturers and suppliers alike, will also be in the vanguard in the international competition."
