Strong ramp-up for electric vehicles – double-digit rise in local production
Press conference statement delivered by VDA President Matthias Wissmann at the Detroit Motor Show on Monday, 12 Jan. 2015, 7.00 h (local time)
Ladies and Gentlemen,
I have pleasure in welcoming you most cordially to our VDA press conference here at the Detroit Motor Show.
As the new automotive year gets underway, the United States offers some good news: while – in a global view – we perceive political risks in many other regions, the US proves to be a center of automotive growth and general economic optimism. The German automotive industry was one of the beneficiaries in 2014. The future prospects for the current year and beyond also suggest even greater opportunities, especially for our industry.
US is a growth market
Please allow me to explain that. The US market for light vehicles (passenger cars and light trucks) expanded by around 6 percent in 2014 to a good 16.4 million units. It developed more dynamically than expected and returned to its pre-crisis level (16.1 million light vehicles in 2007; 16.5 million in 2006). It has increased by 6 million light vehicles (+58 percent) since 2009.
The light truck segment turned in particularly strong results, showing double-digit growth (+10 percent) in 2014 and reaching just over 8.7 million units. By contrast, the passenger car segment grew much more slowly (+1 percent) to 7.7 million units. Light trucks accounted for 53 percent of the total light vehicle market.
The overall economic prospects remain good. In 2014 the US gross domestic product (GDP) rose by around 2.3 percent, and in 2015 it will, in all probability, climb by another 3.0 percent. Unemployment is at 5.6 percent. Since the crisis – when it was running at 10 percent – it has fallen continuously.
Low gasoline prices “turbocharge” the US economy
The entire US economy is also being “turbocharged”: on the one hand, in recent years the United States has become one of the leading oil producing countries. On the other, energy costs are now lower than they have been for a long time. Oil production in the US has risen sharply since the end of 2011. Within a period of only three years it increased by 54 percent (comparing January to October 2014 with January to October 2011).
Within one year the price of gasoline (in dollars per gallon) has fallen by 22 percent – from 3.28 US dollars in December 2013 to 2.54 US dollars (in December 2014). It is easy to work out that higher employment plus lower fuel costs equals greater purchasing power, especially for the light vehicle market.
All of this opens up additional positive prospects for the year just begun: in 2015 we expect growth in the US of around 2 percent to 16.7 million new vehicles.
Most growth in light trucks
In 2014 the German manufacturers pushed up their sales of light vehicles on the US market to nearly 1.4 million units (+2 percent).
- That is a new record.
- And it represents a rise in sales of more than half (+54 percent) compared with the year 2010.
Most of this growth was seen in the light truck segment. Here the German OEMs achieved a year-on-year increase of almost 8 percent, with sales climbing to 405,200 units. They have therefore nearly doubled their sales of light trucks since 2010 (212,000).
Passenger car sales by the German makers came to about 953,500 units, which was fractionally more than the previous year’s result. Our share of the car market is 12.4 percent. This means that one in eight new passenger cars sold in the US bears a German badge.
Several pillars support the German automakers’ strong presence in the American region:
- 46 percent of light vehicles sold by German producers in the US in 2014 were built in Germany.
- A good fifth (21 percent) came from plants in the United States.
- 15 percent came from Mexico.
- So 36 percent of our US sales were vehicles produced in the NAFTA region.
US comes top in export value
In 2014 the German automotive industry increased its worldwide exports by 2 percent to 4.3 million passenger cars. For our companies the US is the number two destination country (after the UK). With our total of 620,000 new cars going to the US, this means that one car in seven that Germany exports is destined for the United States. In terms of value, exports to the US actually come top for the German manufacturers. Their value rose slightly in 2014 to over 20 billion euro – that, too, is a new record. To add to this there is the value of exports by German suppliers, which climbed by 11 percent in 2014 to reach 6.5 billion euro.
US production for the global market and higher employment
The US is also becoming more and more important to the German manufacturers as a production location. During 2014 they expanded assembly at their US sites by 15 percent, to a total of 715,000 units. In comparison with 2010 (285,000 units) they have thus increased their production in the United States by 150 percent. Forty percent of US production was sold here in the US. One quarter (25 percent) went to Asia, while almost another quarter (24 percent) was supplied to Europe.
The German manufacturers currently employ a workforce of 32,600 at their US facilities, which is 1,800 more than one year ago. So now one sixth of all jobs at automotive producers in the US is with a German manufacturer.
German suppliers make an even greater contribution to employment. They represent another 72,000 jobs in the US; this figure has also grown by around 2,000.
Sales of electric vehicles soar
The US market remains dominated by the classical gasoline engine. But at the beginning of 2015 one thing is unmistakable: the keen growth in electric mobility. The German manufacturers in particular recorded an excellent ramp-up in electric vehicles in the US last year. They increased their sales ten-fold within one year, totaling over 11,300 new cars with electric drive (plug-in hybrids – PHEVs, and battery-electric vehicles – BEVs). In the past year alone, our portfolio has quadrupled to eight models.
The overall US market for electric vehicles grew by 23 percent in 2014 to nearly 119,100 units, with the result that one in ten of all new electric cars sold in the US last year bore a German badge.
Market leader in clean diesels
In the US the efficient clean diesel must face the fact that diesel fuel is much more expensive than gasoline. The price difference has actually increased over the last few months; in December diesel cost 3.41 US dollars per gallon – i.e. one third more than gasoline. Yet the market share made up by new diesel-powered cars up to October 2014 grew to 3.1 percent (from January to October 2013: 2.8 percent). During this period, sales of light vehicles with a diesel drive train rose by almost 17 percent to exceed 420,000 units.
The German carmakers lead the field in diesel passenger cars in the US. At present they take 94 percent of the market in this segment. This is of fundamental significance for reducing both CO2 emissions and consumption.
Drivers of innovation: connected and automated driving
One of the really major areas of innovation in this industry is connected and automated driving. The German and American auto industries correctly see themselves as spearheading this development. Here in Detroit, the German companies in particular will have additional new developments on show. Cars are undergoing digital evolution, and some people even speak of a revolution. IT is being integrated into new cars at terrific speed. Experts assume that by 2016 at least 80 percent of all new cars sold will be connected; today the figure is 20 percent. The German automotive industry justifiably aims to be in “driver’s seat” in this multidisciplinary topic.
Use the huge opportunity offered by the TTIP free trade partnership
The German automotive industry has a worldwide presence. In 2014 it produced around 14.8 million autos, over 60 percent of them in countries other than Germany. This is one reason why it is important to draw attention to the political homework needed in Germany and Europe. The framework conditions at home are already having more impact in the competition within companies when it comes to decisions on investments and location. Germany and Europe should therefore utilize all potentials to enhance their competitiveness. This also applies to every individual EU Regulation and every new legislative procedure.
Above all, Europe must focus more on its worldwide trade-policy ambitions for free markets. In respect of the US, there is one key topic: the Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU.
Why does the German automotive industry back the free trade partnership so strongly? Because this key industry is extremely dependent on open markets.
Three out of four cars produced in Germany are destined for export. And the latest figures indicate that exports from the US are also gaining in importance. Trade and foreign investments are two sides of the same coin. The aim is international division of labor and economic exchange, to generate benefits on all sides.
The US is of strategic importance to the German automotive industry – both as a market and as a production location. Import duties in the US and the EU alone add up to about 1 billion euro every year for the German automotive industry. Then there are also non-tariff trade barriers, whose costs – also to consumers – are far higher. If the TTIP eliminates both obstacles, it will open up the way for an enormous growth spurt.
From my point of view, one aspect is especially crucial: today Europe and the US can still set the standards worldwide – with the TTIP. Nobody knows whether this will be the case ten years from now. So for me the TTIP has geopolitical significance. We should therefore do everything we can to exploit this huge opportunity – it offers major advantages both for the United States and for the European Union.
For the German automotive industry Detroit 2015 represents the confident start to the new automotive year. I am certain that in 2015 the North American market will continue to grow. And the German automotive industry is sure to continue expanding its presence in the US, a “country of automobiles.”