VDA’s 16th Medium-Sized Companies Day – “Current challenges facing the automotive industry”
“The German suppliers are drivers of innovation. They generate 75 percent of the added value in automobiles and account for one third of the German automotive industry’s spending on research and development. In 2015 the German suppliers pushed up their turnover by 3 percent to 75.8 billion euros. These generally medium-sized companies employ over 300,000 people in Germany alone,” stressed Matthias Wissmann, President of the German Association of the Automotive Industry (VDA). He was speaking to 200 high-level guests at the VDA’s 16th Medium-Sized Companies Day in Gravenbruch near Frankfurt/Main. Wissmann also drew attention to the study entitled “Drive for innovation at German automotive manufacturers and suppliers” that the VDA recently published in collaboration with the Center of Automotive Management: “According to the study, during the last ten years the drive for innovation in the automotive sector has risen by far more than the average among the competition – across all fields of technology.”
The Medium-Sized Companies Day was opened by Arndt G. Kirchhoff, Managing Partner and CEO of Kirchhoff Holding GmbH & Co. KG, VDA Vice-president and chairman of the VDA’s Committee for Small and Medium-Sized Companies. He was followed by speakers including Andreas Renschler, member of the Board of Management at Volkswagen AG and CEO of Volkswagen Truck & Bus GmbH, Dr. Stefan Sommer, Chairman of the Board of Management at ZF Friedrichshafen AG, and Dr. Carsten Linnemann, Chairman of the CDU party’s SME and Business Association.
Despite welcome market developments, the German automotive industry was currently facing a challenging environment, Wissmann said, and underscored: “The diesel situation affects all of us. Then there are other topics such as temporary staff, and contracts for services and labor, the debate about pensions, inheritance tax and rising energy costs.” For example, he explained, the proposed compromise for regulating the use of temporary workers and contracts was basically positive and was within the framework of the coalition agreement. But when it came to precise details, it would be necessary to ensure that freedom and flexibility were preserved and no additional bureaucratic costs would arise.
With an eye to the main topic of this year’s Medium-Sized Companies Day – digitization – Wissmann said: “The digitization of our society generates totally new possibilities. However, the capacity of the digital infrastructure must be greatly expanded, for instance so traffic can be organized in the best possible way in the available space. Cars, alongside other modes of transport, will continue to play a key role, because people really value individual mobility. The connected car will be an integral part of a multimodal traffic solution. This will make driving even simpler, safer and more efficient.”
Digitization, Wissmann added, offered huge opportunities especially to small and medium-sized firms, for example in new components and parts, and new digital services.
He went on to say that development was progressing at high speed, and policy-makers had also recognized this fact. “When it comes to connected and automated driving, the automotive industry depends on reliable legal provisions, above all for road traffic. Here it is important to have clarity soon,” Wissmann said. The German automotive industry was already striving for the introduction of systems for automated driving in 2018. The VDA president explicitly welcomed the German Government’s support in preparing the way for automated and connected driving.
Wissmann called the government program promoting electric vehicles agreed a few weeks back the “right sign at the right time” and continued, “Automation and electrification are the important future topics for Germany. In particular the subsidy for buying new electric cars will boost the market. A look at other countries shows a clear connection between state incentives and market ramp-up. But a powerful charging infrastructure is also needed.”
In addition, Wissmann pointed out the great opportunities offered by the planned Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU, especially for small and medium-sized firms. Germany depended on exports, he added. One in four jobs was dependent upon foreign trade. Exports of goods and services accounted for roughly half of Germany’s gross domestic product: “We continue to appeal for a comprehensive agreement that enables both regulatory cooperation and the removal of import duties, and at the same time ensures a high level of protection for consumers, the environment and information,” he said. “During the heated debate in particular, the aim should be to continue supporting the advantages of TTIP in a compelling manner.”
Arndt G. Kirchhoff, Managing Partner and CEO of Kirchhoff Holding GmbH & Co. KG and chairman of the VDA’s Committee for Small and Medium-Sized Companies, emphasized: “Connected and automated driving will revolutionize the automotive industry. To keep up with this trend, traditional companies will have to look beyond their own industry and search for new partners to cooperate with. Innovative start-ups can strengthen the drive for innovation. Yet even while legal and technical guidelines for tomorrow’s mobility are being discussed, companies must speed up and test the viability of old and new business models.”
Andreas Renschler, Member of the Management Board at Volkswagen AG and CEO of Volkswagen Truck & Bus GmbH, underscored: “The digital shift represents a gigantic opportunity for us, our customers and our partners. The commercial vehicles of the future will be fully connected – and this is already reality today. With over 200,000 connected trucks from the MAN and Scania brands, right now Volkswagen Truck & Bus is the European leader. From 2017, every one of our newly delivered trucks will be connected. Automation and connectivity in trucks and buses will bring about a lasting reduction in emissions, greatly enhance road safety, and improve the traffic flow for all road users. Our customers will be able to increase their productivity, due especially to new, digital services. Less time standing still, fewer empty trips, faster service – these are just a few examples of the optimizations that will result. In the future truck manufacturers will take on a whole different role owing to new business models. We will become providers of intelligent transportation solutions for our customers and give up the role of pure hardware suppliers.”
Dr. Stefan Sommer, Chairman of the Board of Management at ZF Friedrichshafen AG, stressed: “Global megatrends impact the automotive industry. Technological sea-changes are arriving at a great pace, and society is shifting to completely different requirements for mobility today and in the future. At the same time, new markets and new competitors are emerging. These developments demand that ZF, as one of the world’s leading automotive suppliers, makes a massive thrust in innovations. Technological position is a decisive factor for success in international competition. Since acquiring TRW, ZF has been offering solutions and products for the automotive megatrends of efficiency, safety and autonomous driving from a single source. Intelligent connection of mechanical systems with control units and sensor systems means that we join in shaping the megatrends. This is a strength that none of our competitors has. The interplay between chassis, drive train and driver assistance systems offers new potentials that can be leveraged to satisfy the requirements of tomorrow’s mobility and continue to shape it. However, success will depend crucially not only on innovative products and technologies, but also on efficient structures and being cost leaders.”
Dr. Carsten Linnemann, Chairman of the CDU’s SME and Business Association, spoke at the VDA’s Medium-Sized Companies Day about the overall political challenge: “Germany needs an ‘Agenda 2020’ to get the state fit for demography and digitization – major topics for the future. The party has to push these topics forward while not losing sight of the small and medium-sized companies that form the bedrock.”