German manufacturers bring numerous premieres to Geneva
“The German passenger car manufacturers are bringing exciting premieres to the Geneva International Motor Show. This underscores their dominant position in the premium segment, yet they are also strong in the volume segment. The economy is also doing well: in 2017 the global passenger car market is expected to expand by 3 percent to 85 million units. Europe will grow slightly to 17.6 million cars while Germany remains stable at a high 3.35 million new registrations. China will add 5 percent, putting it within striking distance of the 25 million mark. According to our forecasts, in 2017 the US market will maintain its record sales of 17.5 million light vehicles. Furthermore, we expect that in Brazil and Russia – two countries currently with weak results – the long downturn will come to an end,” stressed Matthias Wissmann, President of the German Association of the Automotive Industry (VDA). However, he added, the sector was facing some huge challenges: “Digital connectivity and electric mobility are accelerating the worldwide race for innovation in the best technologies. That demands great flexibility and enormous investments in research and development. We are tackling these tasks from a position of strength.”
In the period up to 2020, the German automotive industry will invest over 40 billion euros in alternative powertrains alone. Wissmann said, “We are speeding up on our successful path of innovation. Electric mobility offers Germany huge opportunities.” He explained that McKinsey’s Electric Vehicle Index, for example, assumes that in five years Germany will be the largest producer of electric cars – with 1.3 million e-cars, putting it way ahead of the US and China with around 850,000 vehicles each. “By 2020 the German automotive industry will treble the number of electric models it has on offer, from the current 30 to about 100,” the VDA president emphasized.
At the same time, Wissmann said, during the next decade the internal combustion engine would continue to account for a major share of the drivetrain mix on the roads. “Worldwide passenger car sales will rise in the coming years, so the number of new cars with a combustion engine will rise too, even if the growth rate for electric cars will be higher. There will also be the option of using ‘e-fuels’ as oil-independent fuels. These ‘e-fuels’ could be used to secure CO2-neutral mobility even in combustion engines, because they bind just as much CO2 during their production as they release during their combustion,” Wissmann stressed. The technology already existed, he added, although the costs were still very high.
Moreover, in the next three to four years the German automotive industry will invest 16 to 18 billion euros in digitization, which is the second great area of innovation alongside electric mobility. “Our companies are already world champions in patents for connected and automated driving. They account for 58 percent of all patents in this field anywhere in the world since 2010. We want to extend this lead,” Wissmann emphasized.
All this was taking place against the background of increasingly protectionist tendencies in many parts of the world: “Around the globe, the German manufacturers produce 16 million passenger cars, over 10 million of them outside Germany. Our facilities in all countries depend on accessible markets and free trade. We are therefore working intensively on an open and fair trade policy. International cooperation and accessible markets, free trade and direct investments are two sides of the same coin. They bring prosperity and jobs – everywhere, including the US,” Wissmann underscored.
He also described the strong presence of the German automotive industry in North America. “In the last seven years, our manufacturers have quadrupled their passenger car production in the US – to 850,000 vehicles. More than half of these are exported. We employ 110,000 people, 77,000 of them at suppliers. So for us the US is not only a sales market, but also a major pillar of our global production network. And given the 545,000 new cars that we exported from Germany to the US in 2016, the United States is also the second largest export market for German producers.” Regarding some trade-policy announcements from the US, Wissmann stressed, “We take them very seriously. And we hope that the democratic parliamentary institutions in the US will ensure that not all announcements by the US administration and Congress will be implemented.”
“The WTO lists more than 2,200 violations of principles of free trade. Protectionism is the opposite of a promising economic policy. At the end of the day it brings only damage to all nations, despite apparent short-term advantages. Europe’s response has to be to stand together and concentrate on its common strength,” Wissmann stated. The VDA president welcomed the CETA free trade agreement between the EU and Canada: “CETA is strategically important and proves that Europe can take action.” He added that it would now be desirable to have more agreements with ASEAN states and MERCOSUR countries. The signals from China concerning free trade were encouraging, he said, but there was still a lot of work to do.