Statement delivered by Klaus Bräunig, Managing Director of the German Association of the Automotive Industry (VDA), at the press conference at the German pavilion in New Delhi, India, on Wednesday, Feb. 8, 2018, at 11.30 h local time
I have pleasure in welcoming you most cordially to our press conference at the German pavilion at the Auto Expo 2018 Components. The welcome support from the German Federal Government for the German presence at this trade show is underlined by the fact that you, Ambassador Ney, are honoring us with your presence here.
India’s potential – German interest
Why are we here? India is on a path of growth. In 2017 the gross domestic product increased by close to 7 percent, and we expect further growth of 7.4 percent this year. According to data from the World Bank, today India is the seventh largest national economy in the world. In 2000 the country was only in 14th place. Industrial production rose by almost 4 percent in 2017, and a rise of nearly 6 percent is expected for 2018. So the figures are still rising.
There are also welcome developments in the inflation rate: in 2012 it was still around 10 percent. By 2017 it had gradually fallen to 3.8 percent. Even if this year the figure comes to a little over 4 percent, that will definitely be manageable. We see considerable potential in this large country with just over 1.3 billion people. The population is young – more than half of all Indian citizens (54 percent) are under 30, and only 6 percent are over the age of 64. The per capita gross domestic product has also shown a positive trend during recent years, with annual increases of between 6 and 7 percent.
In 2018 the Indian passenger car market will overtake the German market in terms of volume for the first time
The Indian passenger car market should be seen in this context. And here we can see that in the period from 2014 to 2017 this market grew by a good quarter (+26 percent) to 3.2 million new cars. In our forecast we assume that in the current year the Indian passenger car market will expand by 10 percent – to a volume of almost 3.6 million units. This means that for the first time the India passenger car market will overtake the German car market in terms of volume. And the potential has not yet been exhausted – not by a long way. The number of passenger cars here is still low by international comparison. At present India has 24 passenger cars for every 1,000 inhabitants, while Germany has 560 passenger cars for every 1,000 inhabitants.
German automotive industry is strongly represented in 2018
Once more the German automotive industry is strongly represented here in New Delhi – supported by the Federal Government and the IGCC (Indo-German Chamber of Commerce). Major suppliers are present, along with newcomers to the Indian market. We are proud of our close cooperation and of the fact that we take part in each other’s motor shows. For example, the ACMA, the Automotive Component Manufacturers Association of India, will again have an Indian pavilion at the IAA Commercial Vehicles in Hannover in September. On the official German pavilion – which is promoted by the German Government – we have 10 suppliers. Then there are also about 20 more German suppliers here, some of whom are exhibiting at the Auto Expo with their Indian subsidiaries and partners. German passenger car makers are also exhibiting at the “Auto Expo 2018 – The Motor Show” that is taking place almost simultaneously in Noida.
The German car makers have their own production facilities in India. For example, Audi builds its A3, A4, A6, Q3, Q5 and Q7 models at its plant in Aurangabad. The VW Passat, the VW Tiguan and Skoda’s Octavia, Superb and Kodiaq models are also produced there. Since 2007, the BMW Group has had its own plant in Chennai on India’s south-east coast, where it builds its 3, 5, 6 and 7-Series, and the SUV models X1, X3 and X5 from CKD kits. Daimler has a passenger car factory in Pune making the C, CLA, E and S-Classes, along with the SUV models GLA, GLC, GLE and GLS. In the same region, the Volkswagen plant in Chakan near Pune builds VW’s Ameo and Polo models and the Skoda Rapid.
We are delighted by the German commitment at both of these trade fairs here in New Delhi. We very much support a trade show concept bringing manufacturers and suppliers together again on a single exhibition site. We think that the division of the motor show in New Delhi – with the suppliers here in Pragati Maidan, and the vehicle makers there in Greater Noida – is not the best solution. Two years ago there was no German pavilion. In particular our many suppliers in the VDA are expressing their keen desire for the opportunity to present their innovations together with the OEMs in the future at a single trade fair. And in the view of the VDA this would make sense, because OEMs and suppliers can only drive forward the future of mobility if they are in development partnerships. We believe that manufacturers and suppliers belong together. We would therefore very much welcome another large, combined trade show sometime soon.
This is the seventh time that the VDA has initiated a German pavilion here at the Auto Expo in New Delhi with the slogan “Made in Germany.” The pavilion is supported through the official foreign trade show program by the German Federal Ministry for Economic Affairs and Energy and AUMA, the Association of the German Trade Fair Industry. It is being realized by the trade show organizer IMAG. The VDA acts as the initiator, providing local support for participation at the German pavilion during the trade show, and for business information, cooperation requests and media inquiries at the stand. In addition, the VDA organizes a range of activities to support the presence of the German automotive industry in India. One important activity is the meeting of our “Indo-German Working Group on Automotive” this week. It comprises representatives of the Indian and German Governments, important automotive institutions, and the trade associations ACMA, SIAM and VDA. It covers topics that are key to mobility and the automotive sectors in both countries, such as the environment, safety and alternative powertrains, all the way to the regulatory conditions for bilateral trade. We regard this platform as very valuable and wish to thank all those involved for their support.
The Indo-German Working Group was formed in 2007. It therefore has a long and continuous history and has made major contributions to building trust and transparency in our bilateral relations. Its next meeting will take place in Greater Noida on February 9, 2018. We wish to thank in particular the German Federal Ministry of Transport and Digital Infrastructure for supplying active support to this group and you, Ms. Worringen, for your personal dedication.
I wish to draw special attention to a new activity that continues the development of our Indo-German relations. Since last year, with support from the German Federal Ministry for Economic Cooperation and Development (BMZ), we have managed to launch an association partnership program between ACMA, SIAM and the VDA. At the heart of this partnership are further steps to even closer cooperation in various areas of mutual interest, such as climate protection policy, quality management, and trade shows. A firmly established event in Germany is the “IAA India Day” that is held regularly at the IAA with the participation of our Indian partners ACMA and SIAM and the Indo-German Chamber of Commerce (IGCC). This year, too, we would like to invite you to the IAA – the leading international trade show organized by the VDA. In 2018 it is the IAA Commercial Vehicles, and it will take place in Hannover from September 20 to 27.
Potential of mutual trade is not exhausted – direct investments and free trade are two sides of the same coin – new attempt needed to reach a free trade agreement with the EU
Last year (Jan. to Nov.) German suppliers delivered parts and components worth 514 million euros to the Indian market. In return, Indian suppliers exported parts worth 205 million euros from India to Germany. If we look at Indo-German automotive trade in its entirety – that is, taking vehicles and motor-vehicle parts together – we find that Germany has a trade surplus of around 234 million euros (from Jan. to Nov. 2017).
However, obviously too little attention is given to the fact that the Indian automotive industry has a surplus in the trade in passenger cars with Germany: whereas in the first eleven months of 2017 passenger cars worth only 30 million euros were sold from Germany to India, India supplied passenger cars worth 240 million euros to Germany. That clearly demonstrates the India high level of competitiveness. I am therefore very keen to see the negotiations on a free trade agreement between EU and India resumed soon. To date they have not come to fruition and are more or less on hold. From the outset, the VDA has worked for the complete removal of import duties in the automotive sector – even if this is associated with longer transition periods. So far the Indian Government has not ruled out this position; and in fact its passenger car trade surplus should facilitate such a move. This would also be in India’s own interest, because this large, aspiring country also wishes to increase its own exports. For this, free access to the international markets will be absolutely essential – also for India. This is true of the markets around the world: stable direct investments and free trade are two sides of the same coin and integral aspects of sustainable business to everyone’s mutual benefit. Therefore, this week we are also encouraging our partners to ensure that the Indian industry will actively support the free trade agreement with the EU as soon as the negotiations start up again. The good news is that for the Indian and German suppliers there is still more potential for expanding bilateral trade and investments. It will pay off to leverage this potential. For this reason our companies are here, and for this reason they support these goals.
The presence of the German suppliers here in New Delhi in 2018 demonstrates
- The great expertise of the largely medium-sized supply companies;
- Their commitment to both sides of this coin: together they stand for trade with India and investments from Germany.
Here are some examples from the German pavilion:
ACTech GmbH (Freiberg, Saxony in Germany), with an annual turnover of 36 million euros and over 400 employees, has a product portfolio including cast part prototypes in the fields of automotive, mechanical engineering, aviation, aerospace (cast parts made of aluminum, steel, ductile iron and grey casts) and mechanical processing. Typical parts are integral turbines, turbine housings, cylinder heads, cylinder blocks, bearing housings, compressor housings and gearbox housings. ACTech is a market leader in the manufacture of cast part prototypes where it is important to offer speed, quality and the best service. Since 2007 the company has had a presence in India with its own sales structure. Owing to product development, India is currently the most important market in Asia for the company. Local production is not planned at present. The firm’s customers include OEMs from around the world. Networking with existing Indian customers and generating new customers are the main reasons for participating in the German pavilion.
ElringKlinger AG (headquartered in Dettingen/Erms), with an annual turnover of 1.6 billion euros and a workforce of over 9,000 worldwide, 3,900 of them in Germany, has a product portfolio including cylinder head gaskets and sealing systems, shielding systems, lightweight plastic components and modules for transmission and chassis, cell contact systems, cell housings, complete battery modules, fuel cell components, complete fuel cell stacks and electric powertrains. ElringKlinger is a global market leader in cylinder head gaskets.
The company has around 50 facilities worldwide. It regards India as “a very important and aspiring market for the automotive industry and for ElringKlinger itself.” ElringKlinger started producing in Ranjangaon, near Pune, in 2008 and since that time strong growth has been recorded. In 2015 the plant was enlarged, and today ElringKlinger produces on an area twice as large as that when the company was founded. Its customers include manufacturers from Germany and other countries, which themselves produce in India. The main reasons for participating in the German pavilion are the importance of the Indian market, increasing the awareness of ElringKlinger, and networking.
Gedia Automotive Group from Attendorn (2017 turnover of 600 million euros, 4,000 employees worldwide, 900 of them in Germany) develops and produces structural parts and assemblies for lightweight vehicle chassis (for passenger cars and commercial vehicles) and chassis components. Gedia has more than 100 years of experience in the production of pressed, stamped and drawn parts and, increasingly, entire systems. The topic of “lightweight construction” has continually gained in importance over recent years. Gedia has eight production sites in Germany, China, India, Mexico, Poland, Spain, Hungary and the US. In India Gedia has had its own local sales structure since 2016. The firm currently exports goods worth approx. 1.5 million euros.
Gedia regards the Indian automotive market as an important future market that is on a path of growth. The young population and a growing middle class with rising incomes offer additional potential for more growth. In India Gedia has its sights on German manufacturers and others. The main reasons for participating in the German pavilion are to establish business relations and engage in networking.
Hirschvogel Holding GmbH, (Denklingen, Germany): the consolidated turnover of the Group for 2017 amounts to 1.167 billion euros, with about 3,500 employees in Germany and approx. 5,300 employees worldwide. As a development partner for the automotive industry and production specialist in forging and machining processes – both for steel and aluminum – Hirschvogel’s core competencies lie in the application areas of gas and diesel injection, engines, electric drive, transmission, powertrain, the chassis of passenger cars and commercial vehicles, as well as in parts for off-highway applications. The Hirschvogel Automotive Group is headquartered on the site of Hirschvogel Umformtechnik GmbH in Denklingen (Bavaria) – the parent plant of the company. Three additional plants are located in Germany: Hirschvogel Komponenten GmbH in Schongau (Bavaria) as well as Hirschvogel Eisenach GmbH and Hirschvogel Aluminium GmbH in Marksuhl near Eisenach (Thuringia).
Internationally, Hirschvogel is represented by subsidiaries on three continents: Hirschvogel Automotive Components in Pinghu near Shanghai (China), Hirschvogel Incorporated in Columbus/Ohio (US), Hirschvogel Components Mexico in San Juan del Río/Querétaro (Mexico), Hirschvogel Components Poland in Gliwice (Poland) and Hirschvogel Components India in Sanaswadi (India). Since 2010, Hirschvogel has been represented in India by a production facility including a sales department. Its export volume to India comes to 3 million euros per year. Sales in 2017 from the Hirschvogel plant in India amounted to approx. 13 million euros. For Hirschvogel, India is still a small portion of the total market, but it is one of the most ambitious markets in which Hirschvogel would like to grow. It is an emerging market with a tremendous growth potential and therefore very important to the company. The Indian Government is pushing electric mobility by 2030. So high-performance technical suppliers will be needed in future to meet these requirements. Hirschvogel is the technology leader in this segment and expects a good contribution in the emerging technologies. Since 2010, Hirschvogel has been represented by a production facility in India. Hirschvogel’s customers include both local customers and international OEMs including their first tier suppliers. There are no plans regarding a joint venture in India as Hirschvogel is already represented in India by its subsidiary Hirschvogel Components India in Sanaswadi. Hirschvogel would like to present its know-how, the Hirschvogel technologies and its range of products.
The Huf Group is represented at the Auto Expo by the companies Huf Hülsbeck & Fürst GmbH & Co. KG (Velbert) and Huf India Pvt. Ltd. (Pune, 220 employees).
The Group’s turnover is 1.6 billion euros, and it employs 7,800 people around the world, 1,400 of them in Germany. The product portfolio includes vehicle access systems and driving authorization systems, passive entry and door handle systems, systems for tailgates, mechanical locking systems, plus tire pressure control and telematics systems. Huf is one of the market leaders in door handle systems and locking systems for the automotive industry. Huf has facilities of its own in many continents. Huf has had its own sales structure in India since 2007.
Huf sees the Indian market as highly significant. The main reasons for participating in the German pavilion are the possibility of making new business contacts, raising awareness of the company, and customer contacts.