Success through innovation and internationalisation – Passenger car and commercial vehicle markets in good shape – High employment level – Recovering credibility – Modern diesel engines necessary for CO2 goals – Maintaining a balance between climate protection and industrial policy – In favour of WTO-compatible trade agreements
Ladies and Gentlemen,
Allow me to bid you a very warm welcome to the semi-annual VDA Press Conference. It is being held in turbulent times. This is my first semi-annual press conference as VDA President. I would therefore like to start on a personal note. I take the past events and the current developments very seriously. We have incurred massive losses of trust and credibility. This touches me personally too.
We are working to gain new trust and confidence and strengthen our credibility again. This cannot be done at the touch of a button – it needs time. It means that we do what we say we will do, that our actions are determined by reliability and transparency. We must “deliver” what we have promised.
I have been working in the automotive industry for 36 years. During this time the German automotive industry has tripled its production, while global passenger car production has only doubled. I have experienced and followed the worldwide rise of the German companies and actively supported this in my respective function or position at the time.
Now in particular the member companies need a VDA that bundles the interests of the industry and represents them convincingly vis-à-vis policy-makers and the public. My argument is that each fair assessment calls for differentiation – in every respect.
At the same time the German automotive industry is driving ahead the transformation process leading to mobility fit for the future at high speed. Helping to shape this progress is a very exciting task that I am tackling with passion and pleasure. The goal is to expand the globally strong position of Germany’s automotive industry further. That is what motivated me personally to take on this task.
The success of the German automotive industry rests on two pillars – innovation and internationalisation. Our companies are facing a number of different challenges at the same time. Alongside more short-term aspects, we also have to face up in the medium and long term to questions that are crucial for the future of this industry.
Keywords here are
- diesel and air quality,
- reputation of the industry,
- CO2 regulation post-2020
- protectionism, customs duties and trade conflicts
Furthermore, the entire industry is going through the transformation process. This includes
- electric mobility and alternative drive systems, as well as
- digitization, networking and automated driving.
Billions need to be invested here and this must be financed from ongoing business. This means that in particular some small and medium-sized enterprises will have to thoroughly review their business models on the grounds of new challenges.
All this will influence the markets, which are currently in good shape. I shall say a few words about this. And of course I aim to give you a first look at the 67th IAA Commercial Vehicles that will be held in Hanover in September and is being organised by VDA.
Swift improvement of the air quality in towns and cities – modern diesel engine necessary to achieve climate protection goals
Internal combustion engines are also an important component of this transformation. They include the modern diesel engine. We are making good progress with the measures agreed for improving the air quality in towns and cities – software updates, changeover bonuses, mobility funds. We are flanking this with the Urban Initiative in which our companies are participating.
The debate about possible bans on driving has left traces in the market. In the first six months of the year the share of diesel vehicles in new car registrations in Germany has dropped to just under one third. This does nothing for climate protection. The fewer diesel vehicles are sold, the higher the CO2 values among the new registrations will be. It would therefore be completely wrong to “write off” the diesel. Anyone who takes climate protection seriously knows this. The modern diesel engine is necessary in order to reach the climate protection goals in road traffic.
We need to make the debate more objective. The fact is – since 1990 the nitrogen oxide emissions attributable to road traffic have improved by around 70 per cent – even though the volume of traffic increased by 50 per cent in the same period. The latest EU Exhaust Standards ensure that the modern diesel engine now only features very low nitrogen oxide emissions. The “guidelines” of the new measuring processes have been tightened substantially by comparison with the old specifications (NEDC). This is good and caters to responsibility.
The diesel engine still remains a hallmark of the technical expertise of German manufacturers. We have a share of 51 per cent of the market for diesel passenger vehicles in Western Europe and a share of 78 per cent in Germany. In Western Europe diesel vehicles account for 38 per cent of all passenger car sales. And every second one of these vehicles bears a German group badge.
The air quality in towns and cities is steadily improving.
- In 2017 alone, 1.1 million modern Euro-6-diesel engines came onto the roads and nearly the same number of older diesel engines left the ranks.
- With phased traffic lights creating a “green wave” in the towns and cities and more efficiency in searching for parking spaces thanks to digitization, the levels measured are falling further.
Politicians in Germany do not want bans on driving, nor do we, and car drivers most certainly do not. Consequently it is high time to give precedence to reason again. The modern diesel engine is not part of the problem, but instead part of the solution. We in Germany are leaders in this technology – our competitors know that they cannot overtake us here. We should therefore not thwart ourselves either.
CO2 Regulation post-2020 requires a sense of proportion
Even the 95 grams target (2020/2021) is very ambitious and can only be achieved if the share of e-cars increases substantially. We are doing everything we can to achieve this goal. Europe has by far the most demanding CO2 targets. Japan has decided on 105 grams, China on 117, and the USA on 121 grams. We should therefore keep an eye on the other markets particularly in connection with CO2 regulation. Regrettably, however, there has been no indication of this so far.
On the contrary. The Commission’s draft is known. It presents the automotive industry with extreme challenges and calls for substantial shares of electric mobility. Whether these CO2 target levels (minus 15 per cent by 2025, minus 30 per cent by 2030) can be achieved depends not only on customer demand for electric vehicles, but above all on how quickly the public infrastructure can be built up throughout the country. Other proposals, for instance from the EU Parliament, go even further – there is talk there of minus 50 per cent.
We want to make our contribution to climate protection. But we need feasible goals. Policy-makers should not overstrain the companies, otherwise they will jeopardise the industrial basis in Europe. Furthermore, the EU Commission has for the first time defined extremely ambitious targets for heavy commercial vehicles as well. Here too, we advise maintaining a sense of proportion. Efficiency and economic consumption rates have always been crucial issues in commercial vehicle sales. Trucks and passenger vehicles are two very different things. Consequently CO2 target values should not simply be taken over.
We urgently need to find a balance. The goals of climate protection and industrial policy both need to be followed. Otherwise things will get very much out of hand – with serious consequences for growth, prosperity and employment. The development of CO2 emissions in road traffic altogether, in other words not only for new vehicle registrations, is influenced substantially by the good economic situation in Europe with higher road freight transport volumes. Do citizens really want to do without growth and prosperity?
High investments in electric mobility and digitization
I would now like to explain the forward strategy of Germany’s automotive industry. We are driving two innovation themes ahead with great commitment:
- electric mobility and other alternative forms of drive system,
- digitization, networking and automated driving.
In the coming three years German manufacturers will be tripling their programme from 30 to over 100 e-models. In the same period our industry is investing altogether EUR 40 billion in alternative drive systems, with the emphasis on electric mobility. New registrations of electric vehicles in Germany more than doubled in the past year and in the first five months of 2018 they have increased by around 60 per cent. We already have a strong market position today. We have increased our market share of new electric passenger car registrations in Western Europe to 48 per cent, and in Germany to 66 per cent. The success of our companies is also reflected by the fact that 80 per cent of the electric passenger cars produced in Germany are exported.
However, alongside the model offensive, a crucial prerequisite for the success of electric mobility remains fast and nationwide construction of charging infrastructure and securing of its performance capability. This must now be implemented swiftly. The extension of the ‘environment bonus’ with the existing terms and conditions would be expedient – the funding has not yet been exhausted. A share of 15 per cent electric vehicles in Europe by 2025 can only be achieved via a joint effort by the industry and policy-makers. The current share is a good two per cent.
However, electric mobility will not be the only form of drive system. The highly efficient internal combustion engine also has a future. And natural gas and hydrogen drive systems remain in the running. Climate-neutral e-fuels are an excellent complement.
Digitization, networking and automated driving
The second driving force for innovations consists of digitization with networked and automated driving. The goal of our manufacturers and suppliers is to make road traffic even safer, more efficient and more comfortable in future. We shall continue to boost support for drivers step by step and thus avoid accidents. For this we are developing automated driving functions building on existing driver assistance systems.
Every second worldwide patent in networked and automated driving comes from the German automotive industry. Germany is the world patent champion in this segment. In the next three years we shall be investing around EUR 18 billion here. This will support gradual introduction of automated driving, as well as the determining of international regulations, which needs to be speeded up. Let me give you an example: we shall soon have fully automatic multi-storey car parks into which we won’t need to drive anymore, but instead will hand over our vehicle per smartphone. Because nobody enters or leaves the car park anymore, the cars can be parked much closer together and the parking levels will be used far more efficiently. Paintwork damage caused by “parking rowdies” will then be past history – and car drivers will gain time because they no longer need to drive laboriously through multi-storey car parks looking for a space.
Our manufacturers and suppliers see themselves increasingly as providers of comprehensive mobility services, supplementing public transport. They serve to optimise traffic in densely populated areas and additionally satisfy individual mobility needs. Thus for instance in Hamburg, Munich, Stuttgart, Dresden and other cities, new Ride-Pooling offers with purely electrically powered shuttle vehicles will be started up. All these projects will accordingly make a major contribution to permanent improvement of the air quality. Car sharing, Ride-Hailing, E-Scooter-Sharing, mobility platforms and mobility apps are offers that are already available today and go well beyond the conventional business of the automotive industry. Automation of traffic will also increase on motorways.
In order to be able to make use of the digital potentials on the road, dynamic and universal mobile radio network coverage along all traffic routes is necessary. One thing is clear – we want to remain in the driver’s seat in both key areas of innovation – electric mobility and digitization. We shall not be satisfied with the role of passenger. We see IT companies as partners – but always on an equal footing. The core competence areas of automobile and mobility service provider will remain with our companies.
Trade policy, protectionism and protective tariffs
The German automotive industry is so successful because it has been able to implement its strategies of internationalisation in free and fair competition. Today we are faced with perceptible protectionist measures that will impair this basis for success:
- possible import duties by the USA on vehicles from Europe
- China’s announcement of customs tariff increases on cars from the USA
We are observing the development in international trade policy very attentively and with great concern. As an exporting country, we have to rely on free access to the market. This also applies to our bases in the USA as well. Every second car that we produce in the USA is exported. In discussions we repeatedly point out the importance of the German automotive industry for the USA very clearly.
Despite the currently difficult situation regarding the USA, our plea is that we maintain discussions at the political level in order to strengthen transatlantic relations and solve the problems. Obstacles to trade can only be dismantled by both sides. A WTO-compatible transatlantic agreement that covers industrial tariffs could be a possible way towards this. This would be a win-win situation. It is also clear that the rules of the WTO must form the basis for future agreements between the EU and the USA. And here I would stress – there is no proposal for unilateral concessions or mutual dismantling of tariffs on vehicles alone. However, the EU needs to act as a single unit too. If it does come to unilateral increases in tariffs by the USA, there must also be a counter-reaction. A second “area needing attention” that we are viewing with great concern is the Brexit. Here too we are hoping for a rational solution. However, the cohesion of the EU 27 takes priority for us.
Passenger vehicle market in good shape
Despite the economic and political uncertainties, Germany’s automotive industry is strong. It remains a growth industry.
German passenger car manufacturers will increase their global production by one per cent in 2018 to the new record level of 16.7 million units. Of these, 11.2 million units (+3 per cent) will be produced abroad. Domestic production at 5.5 million passenger cars will remain slightly below the previous year’s level (-3 per cent). 4.2 million passenger cars will be exported, so that the export rate will be 76 per cent. In the first six months of the year Germany’s passenger car market grew by three per cent to 1.84 million units. Domestic orders received are stable, while orders received from abroad have increased.
We are confident as regards the year as a whole as well – here are the forecasts:
- The global passenger car market is set to grow by two per cent in 2018 to 86 million passenger cars.
- For Europe we expect a small plus of one per cent to 15.8 million passenger cars.
- For the German passenger car market we expect a growth of one per cent to around 3.5 million passenger cars. Currently (as at April 2018) the automotive industry employs 832,000 staff in the core workforces.
- In the USA there will be a slight decline with 16.9 million light vehicles (-2 per cent).
- China will remain on growth track with 24.7 million passenger cars (+2 per cent).
- In addition there will be strong recovery in Russia and Brazil.
Commercial vehicle markets on growth track
The commercial vehicle markets (over 6 t) have also developed positively in the year to date (January to May 2018):
- In Western Europe there has been an increase of one per cent to around 125,000 heavy-duty trucks.
- The US truck market has been developing dynamically again since the second half of 2017. This year sales increased to 183,300 trucks (+18 per cent).
- The world’s largest truck market, China, has grown by 12 per cent. Here a good 645,000 vehicles have already been sold.
- Furthermore Brazil, the “problem child” of the past years, is giving cause for optimism again. Sales climbed by more than a half to almost 25,000 units (January to May). However, we are still well distant from earlier peak levels here.
IAA Commercial Vehicles 2018 dominated by digitization
These developments give us a boost for the 67th IAA Commercial Vehicles to be held in Hanover from 20 to 27 September this year. This globally leading trade fair for transport, logistics and mobility will also focus on the mega-trends electric mobility, digitization, networking and automated driving. One example of the benefits of digitization is platooning. A few days ago the world’s first practical application of networked truck convoys started on the digital test field of the A9 autobahn between Munich and Nuremberg. This will make logistics processes even safer, more efficient and more environment-friendly.
At the IAA, the question of urban mobility and logistics will be addressed comprehensively. And with the New Mobility World we are offering an experience that goes well beyond a conventional commercial vehicle trade fair. Exhibitor registration figures are good and the exhibition stand area will be even larger than it was in 2016.
Let me summarise:
- The passenger car and commercial vehicle markets are in sound shape. This represents a good basis for a successful IAA Commercial Vehicles in Hanover.
- In connection with diesel engines we are working intensively to gain new trust and confidence with transparency and reliability. We need the modern diesel engine in order to achieve the CO2 goals – these engines are part of the solution.
- At the same time we are investing massively in electric mobility, digitization, and networked and automated driving. This will secure our competitiveness in future too.
- We plead for realistic post-2020 CO2 regulation. The automotive industry and its staff need feasible targets.
- We are observing the development in international trade policy with concern. As an exporting country we depend on fair and free trade. We plead for transatlantic discussions in order to find solutions, as well as for a clear position.
- The joint dismantling of trade obstacles would be a win-win situation and also be compatible with WTO requirements.
- At present there is nothing to indicate that this will happen. That is why the EU must act as one and speak with one voice. If there are unilateral customs tariff increases, Europe will need to exercise a counter-reaction.
- In view of the many challenges facing the German automotive industry, we need a stable government in Germany that represents its industrial policy position convincingly in Brussels and is heard in the EU and worldwide.
|June 2018||January - June 2018|
|Passenger cars *)||Volume||Change
18/17 in %
18/17 in %
|German makes incl. group makes||238,700||6||1,281,900||4|