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Peter Oswald VDA - Verband der Automobilindustrie

Wissmann: German automotive industry wishes to grow faster than the US market again in 2013

Impact of clean diesel offensive more hybrids on offer

Detroit/Berlin, 14 January, 2013.                  As the North American International Auto Show (NAIAS) got underway, on Monday the German Association of the Automotive Industry (VDA) held a press conference in Detroit (MI), USA. Below we reproduce the statement delivered by VDA President Matthias Wissmann:

Ladies and Gentlemen,

this January we are especially glad to be here by the Detroit River. The US automotive market has revitalised itself with amazing speed and dynamism. Last year it shifted up several gears. We are especially delighted that in 2012, in both the passenger car and the light truck segments the German manufacturers grew faster than the relevant US markets.

For example, the German manufacturers increased their 2012 car sales by a good 22 per cent to 920,400 units, while the total passenger car market in the US expanded by nearly 19 per cent, to a little over 7.2 million units. This means that in the passenger car segment we have pushed up our market share to 12.7 per cent. More than one new car in eight sold in the US in 2012 bore a German badge.

In light trucks, the German OEMs strongly increased their sales last year by over 19 per cent to 345,000 units. They therefore grew more than twice as much as the overall light truck market, which recorded a rise of just over 8 per cent, to 7.2 million units. The light truck segment accounts for roughly half of the total US market. It is impressive to see how the German producers are consistently expanding their market share in this area, too. Overall, the US light vehicles market (passenger cars and light trucks) expanded in 2012 by a good 13 per cent to over 14.4 million light vehicles. One year ago no one expected this dynamic growth. The strength of the recovery is revealed by comparison with the crisis year of 2009. Since then, the US light vehicle market has expanded by over 4 million units, or almost 40 per cent!

The German brands also turned in a good result in terms of the overall figures: in 2012 they pushed up their sales of light vehicles by over 21 per cent to around 1.27 million units. Their share of the light vehicle market increased by 0.6 percentage points to reach 8.8 per cent.

For our manufacturers the automotive year 2012 was therefore the most successful year ever on the US market. All the German brands that are active here recorded double-digit rises in their light vehicle sales. In view of the "model offensive” that our member companies are showing in Detroit, everything suggests that we will expand in North America for the eighth year in succession. I am not anticipating today’s premieres by mentioning a particular trend: the "Fascination of the Car” is again alive and well in the US! The pleasure of driving a stylish, sporty car is tangible at this trade fair – and is even enhanced by good fuel consumption! It is the German manufacturers who here in Detroit are showing the way forward for premium and efficiency!

In the current year growth on the US market will indeed slow down somewhat, but North America will continue to expand. According to forecasts, the gross domestic product will climb by around 2 per cent. The real estate market is recovering slowly, as shown by the S&P/Case-Shiller Home Price Index, and house prices are picking up again to some degree. The price of a gallon of regular gasoline, which came close to the 4-dollar mark several times last year, has eased off and in December it came to about 3.30 US dollars. That, too, has tended to benefit motorists and the buyers of new cars.

Furthermore, in 2012 the US light vehicle market still did not get back to its long-term average, which – measured against the sales figures of the last twelve years, that is, since 2000 – is just over 15 million units. Alongside the catching up after the crisis years, when many US customers had to delay buying a new car, there is another point to consider: during the years 1999 to 2003, an average of nearly 17 million new light vehicles were registered in the United States every year, and sales never fell below 16.5 million cars. This large volume of vehicles is now getting to an age at which it becomes more and more urgent to buy a new car. There is a lot to support the view that in the US more vehicles will now be replaced in the next one or two years. In 2012 the average age of light vehicles here was 11.2 years, whereas in 2007 it was only 10.0.

The medium and long-term chances also look good for the North American market. This is backed up by the underlying data and long-term growth indicators. The average age of the US population is 37, which is much younger than that in Germany (45). Moreover, population growth in the United States stands at 1 per cent – significantly higher than in Germany (+/- 0 per cent). So in the future more young people will need more new cars. We therefore expect that in 2013 the US light vehicle market will increase to more than 15 million units.

Sales of clean diesels among light vehicles up by over one quarter

In the US the German manufacturers are the pioneers in diesel passenger cars. For years they have taken 100 per cent of the market. More and more US customers are recognising the advantages of the efficient clean diesel. Compared to 2009 the German manufacturers have more than doubled their sales of diesel cars in the United States. In the first ten months of 2012, the German OEMs sold a total of more than 77,300 diesel passenger cars; in the same period in 2009 they sold only just over 34,300 units. That represents a rise of 125 per cent. Against 2011 our manufacturers have increased their diesel car sales by 22 per cent.

Even more impressive are the growth rates the German vehicle-makers have achieved in sales of light trucks with diesel engines. In the first ten months of 2012 they sold 38,900 diesel light trucks, which meant that the volume almost trebled in comparison with the same period in 2009 (10,800 units); compared with 2011 this is an increase of 37 per cent.

In diesel light trucks we are continuously expanding our market share. At a good 16 per cent (in 2012), it has more than doubled compared with 2009 (7.5 per cent); it has also increased in comparison with 2011 (13.5 per cent). One in six diesel light trucks sold in the United States today bears a German badge. Of course we know that the proportion of diesels among all light vehicles (passenger cars and light trucks) in the US is still low compared with Western Europe. Yet it is the growth rates that are decisive. And they have been positive for diesels for years. The diesel share of the light vehicle market has been rising steadily and since 2009 it has grown by more than one quarter (to 2.7 per cent).

Here the German manufacturers have also continuously expanded their market share in diesel light vehicles: from one quarter in 2009 to one third in 2011, to the current figure of almost 37 per cent. And even compared with the same period last year, the German brands increased their sales of clean diesels among light vehicles in the first ten months of 2012 by more than one quarter (26 per cent) to 116,200 units. Everything points to the German manufacturers continuing to advance both in sales and in market shares of clean diesel light vehicles, because the number of models powered by clean diesel engines – whether passenger cars or light trucks – offered by the German brands on the US market is rising all the time. May I mention here as an example just the brand Audi, which at the automobile trade show in Los Angeles recently announced numerous additional clean diesel models for the US market.

Joint information campaign for clean diesels

We are also starting a new communication offensive for clean diesels. One month ago six German automotive firms – the car manufacturers Audi, BMW, Daimler, Porsche and Volkswagen, plus the supply company Bosch – launched the first ever joint information campaign on "clean diesels” in the US. With the slogan "Clean Diesel. Clearly Better.” the campaign publicises on the Internet the advantages of modern diesel passenger car technology over gasoline engines in terms of cleanliness, consumption and performance.

The "Clean Diesel. Clearly Better.” campaign, which was developed by the VDA in cooperation with our member companies, consists of a website (www.clearlybetterdiesel.org) and flanking offline activities by the participating firms on the US market. Their common goal is to create a multi-brand information platform for clean diesels among the US population and to make the clear advantages of this technology even better known among the US population using first-hand information.

With brief examples from everyday motoring in the US, the website explains not only facts – simply and comprehensibly – about the dynamics of the diesel drive train and its advantages in fuel consumption and CO2 emissions, low noise emissions and refuelling costs. This is done using small, playful online animations informing users of computers and mobile devices about clean diesels and their efficiency. For instance, website users can not only calculate in a split second the consumption advantage of a diesel vehicle, but can also hear how quiet a modern clean diesel drive train is these days compared with a passenger car from the 1990s.

In addition, the companies involved present current models of cars that deserve to bear the "Clean Diesel. Clearly Better” logo. These clean diesel vehicles comply with the very strict environmental standards in all 50 US states. On average their fuel efficiency is 18 per cent higher than corresponding models with gasoline engines. The campaign participants are aiming to put over the clean diesel alternative to interested US citizens in as much detail as possible, so the website also provides background information on the latest research and development, and on the overall environmental framework in the USA. Furthermore, it is linked to US initiatives that are active on the topic of clean diesels in the States. Other manufacturers and suppliers may also join the campaign.

Numerous new hybrid models

Today we are putting the clean diesel right in the foreground, but our manufacturers are also optimistic about their progress in hybrid vehicles. The proportion of hybrids among all light vehicles climbed from 2 to 3 per cent in 2012. Sales of hybrid vehicles have thus soared by 64 per cent to 427,700 units. So a hybrid market is developing in the US.

Here, too, the German manufacturers are increasing their market share. In light trucks it comes to a good 7 per cent. The latest developments make us very confident. Most recently the German brands have launched numerous hybrid models onto the US market, which are now gradually having an impact. They include the Audi Q5, the BMW 3, 5 and 7-Series, the E-Class and S-Class from Mercedes-Benz, Porsche’s Panamera and Cayenne, and the Volkswagen models Jetta and Touareg. In addition to the classical US market for gasoline-powered vehicles, the German manufacturers are thus taking part in the expected ramp-up of clean diesels and hybrids! This means that all the time we are continuing to pursue our broad-based strategy: we are not backing one technology only, but are optimising the classical internal combustion engine and simultaneously developing alternative drive trains.

Successful two-pillar strategy: more exports and more local production

The two-pillar strategy, which our manufacturers also are pursuing on the US market – exports from Germany coupled with production in this country – is paying off. US sales of light vehicles built within NAFTA (US, Canada and Mexico) have grown by one third to 500,000 vehicles, and imports from Europe to the US have also increased. So the German automotive industry has become more independent of currency fluctuations. At the same time, this trend underlines North America’s great importance both in the global production network and as an export hub. In total, the German manufacturers produced around 1.27 million light vehicles within NAFTA in 2012 – a year-on-year rise of 30 per cent. So one in six new vehicles built by German manufacturers abroad rolled off assembly lines in the NAFTA countries. The lion’s share of these were destined for export; 40 per cent of them were sold in the US. In the US alone, the German vehicle makers expanded their production by over one third to 650,000 light vehicles. The main drivers here were the Volkswagen plant in Chattanooga (TN), the BMW site in Spartanburg (SC) and the Mercedes-Benz plant in Tuscaloosa (AL). Furthermore, most of these vehicles go to other markets, with one quarter being destined for Europe.

In 2012 the German manufacturers increased their exports from production sites in Germany by 20 per cent to 630,000 passenger cars. Then there are also a good 150,000 vehicles that were produced at sites outside NAFTA and exported to the US. Receiving 15 per cent of all German passenger car exports, the United States is the second most important export partners for the German automotive manufacturers (after the UK). In terms of value, the German makers’ number one export partner is in fact the US (with around 19 billion euro).

One sixth of the workforce is employed at German manufacturers – and one seventh at German suppliers

German OEMs employed a workforce of around 31,200 at their plants in the US (as at October 2012). This represents 2,400 more jobs than in the previous year. The German manufacturers have thus taken on staff at a faster rate than the automotive industry as a whole. The overall number of employees at vehicle manufacturers in the US rose by 6 per cent to 172,700. This means that German companies account for more than one job in six at automotive OEMs in the US. In October 2012 the entire US automotive industry (that is manufacturers, suppliers and the commercial vehicle industry) employed 776,000 people (up by 6 per cent), which was somewhat more than the industry in Germany. Of these, 478,500 (up by 5 per cent) were employed at suppliers. The number of employees at German supply companies in the US has climbed to 68,000 – which is one in seven of all employees at supply firms in the United States. So, in total, there are around 100,000 people employed at German manufacturers and suppliers in the US.

From the viewpoint of Germany as a production and employment location, it is of key importance to have the right general conditions for exporting. Therefore we are working to reduce trade barriers around the world, but we ourselves are open. The German automotive industry will always be present wherever there are exciting markets. However, "Made in Germany” remains crucial to the huge international respect that our brands and products enjoy. Here politicians have to create the correct framework conditions.

Planned US trade agreement: common standards to exploit opportunities

Here at the Detroit Motor Show it becomes clear that very open markets benefit consumers, and also the significance that trade policy has acquired for states, their citizens and their companies. We regard it as a success that European policy-makers have now recognised just how necessary it is to continue dismantling trade barriers in order to strengthen industrial locations, and not only in Europe. Therefore, following the failed efforts to complete the Doha Round, more negotiations are now being conducted on free trade agreements. We generally support this, but we also appeal for the correct main focuses: Germany and the EU should aim first and foremost for agreements with those countries that offer economic growth and large future markets. There all trade barriers should be eliminated.

For this reason we expect to see especially positive effects from an agreement between the EU and the US. The negotiations are scheduled to start this spring. Here the most important aspect will be to dismantle regulatory barriers. At present this is still a vision: a joint EU-US market constituting around 40 per cent of the global light vehicle market! Politicians in the US and Europe should make this vision their common aim in the negotiations. If we could determine common standards, i.e. move towards harmonisation, which would release new economic energy on both continents. That would, furthermore, have an enormous impact on the rest of the world. There is special potential where completely new standards are defined, such as in the case of electric mobility. We should shape these rules jointly right from the outset.

The EU needs its ally the US – and the US needs its ally the EU, to successfully bang the drum in other countries around the globe for reducing barriers to market access. Today the automotive sector is a global industry. In particular, given that in all probability the global passenger car market will be heading for the 70 million mark this year – after expanding by 4 per cent to over 68 million units last year – it will be crucial that the overall conditions enable a level playing field for all.

Summary

I will summarise briefly: the results from the automotive year 2012 here in the USA are positive through and through for the German manufacturers and suppliers. We are gaining market shares in both the passenger car segment and the light truck segment, and are thus continuously improving our position on this very lively market. The potential has not been exhausted yet by any means: even in 2012 the US market was still below its long-term average. So there will be a need to catch up in the next one or two years.

These are good prospects for the German manufacturers. The premieres that we will see here at the Detroit Motor Show give us every reason to be optimistic. No matter whether we are looking at super charged gasoline vehicles, clean diesels or hybrids: in all types of drive trains the German brands have exciting new offers that go down well with their premium quality and their efficient fuel consumption. The German manufacturers can see green traffic lights on the US market: we want to do everything we can to increase our market share this year, too.