Global Presence
Today the German automotive industry has a global presence of 2000 assembly plants. Western Europe is its undisputed core, at present with more than twice as many production plants and licensees as Central and Eastern Europe or NAFTA. Even though there has been more dynamic development at locations in China in recent years, it is clear that Europe's importance has risen markedly in the global portfolio, as compared to the beginning of the 1990s. Today over 50 per cent of the German automotive industry's production plants are located in the enlarged EU. At the beginning of the 1990s the figure was only 40 per cent.
Taking countries individually, Spain is the most important location for passenger car production, followed by China, then Brazil and the Czech Republic. Belgium and Mexico are also important locations for the German automotive industry, along with the USA and the United Kingdom.
In the 1990s the German automotive industry played a pioneering role, especially in connection with its early activities in the Central and Eastern European countries, i.e. in the Czech Republic, Slovakia, Poland and Hungary. And right now this example is being followed by Japanese, French and Korean manufacturers (PSA / Toyota and Hyundai / KIA) with production locations in Slovakia and the Czech Republic. They are making products targeted at the German market in particular, aiming at the especially price-sensitive compact cars and lower medium segment.
In order to remain competitive on costs in the face of this competition, greater proportions of production in the supply industry in particular will have to be relocated to the Central and Eastern European states. The continuing commitment of German supply companies (already around 190 of them in 2004) shows that using cost-effective production plants to optimize the whole cost structure makes a significant contribution to ensuring competitiveness, going beyond supplies to the vehicle manufacturers' assembly plants.
Overall the Czech Republic, with its 68,000 employees, clearly has the greatest presence of the German automotive industry in Central and Eastern Europe, followed by Poland and Hungary with 38,000 and 30,000 employees respectively. A total of 160,000 people are employed by German automotive firms in Central and Eastern Europe (of which approx. 60,000 are employed by the vehicle manufacturers, and approx. 100,000 by the supply industry).
The increasing importance of the new member states is also reflected in the automotive trade balance. Imports amount to 14.7 billion euros and exports amount to 12.3 billion euros. Automobiles make up 26% of German imports from the accession countries and 22% of its exports to them, which means that automobiles are by far the most important products in the trade in goods in both directions. Against this background the situation of the automotive industry is occasionally seen as an indicator of a "bazaar economy" in Germany, where only prefabricated units are combined and then sold on to other countries. However, analysis of the value-added flows contradicts this:
The correct picture is that the imported prefabricated units increased by 125 per cent from 1995 to 2000, according to a study by the Federal Statistical Office. At the same time exports climbed by 75 per cent. This means that the proportion of exported products made up by imported units in this industry had already reached a good 35 per cent in the year 2000. For the present a proportion of about 40 per cent can be assumed. However, what is significant is that the combination of success on the export markets and an optimized procurement mix has obviously been accompanied by growth in domestic value-added. So Germany as a production location has profited overall from the globalization strategy, in both sales and procurement.
