Press Releases

Mattes: German automotive industry backs electric mobility and digitization in China

Shanghai/Berlin, 16 April 2019

Statement delivered by Bernhard Mattes, President of the German Association of the Automotive Industry (VDA), at the VDA’s press conference in the German pavilion, Auto Shanghai, on Tuesday, April 16, 2019, at 14.00 h (local time)

The pavilion comprises 17 medium-sized German suppliers. Alongside the German manufacturers, there are also several large supply companies from Germany with their own exhibition stands here in Shanghai. So Germany is offering an exciting overview of the automotive value chain. The extensive competence and strong drive for innovation of the German producers – together with the German supply companies – are making a mark on this trade show. Our companies are now, more than ever, backing electric mobility and digitization, and above all here in China!

The joint presentation by the supply companies is supported by the Federal Ministry for Economic Affairs and Energy (BMWi). We wish to thank AUMA (the Association of the German Trade Fair Industry) and the trade fair service company IMAG once again for their excellent cooperation.

Last year the German automotive industry produced 16.4 million passenger cars worldwide, 11.2 million of them at foreign facilities. Overall, around one car in five built anywhere in the world in 2018 bore a German group badge.

In 2018 the German automotive industry increased its production, sales and market share in China

For the German automotive industry, China is a very important partner – in development, production, sales and cooperative projects.

Since the beginning of this decade, the German manufacturers have almost quadrupled the number of production plants they have in China – from eight to around 30 factories.

Compared with 2010, the Chinese passenger car market has more than doubled – from 11.3 million cars to around 23.3 million cars in 2018. Sales in 2018 actually showed a year-on-year fall for the first time (-4 per cent). But we assume that in the medium-term the Chinese passenger car market will return to a growth phase; the potential has not been exhausted yet – not by a long way.

In this decade, the German manufacturers have kept up with the high speed of growth. Their passenger car sales in China rose from nearly 2 million (in 2010) to a little over 5.2 million cars last year. That is a rise of 7 percent over 2017. So in 2018 we bucked the trend and grew. Our market share reached the record level of 22.4 percent. More than one new car in five sold in China comes from a German brand. We have also got off to a good start in the current year and at present our market share is 23.6 percent.

Right now the Chinese automotive business has shifted down a gear, and during the first two months new car sales fell by 17 percent to 3.2 million passenger cars. Yet it would be a mistake to project a linear continuation of this trend. The Chinese market is much more volatile than the European car market, for instance. Assuming that the trade disputes between the US and China can be resolved constructively, we expect stable development over the year as a whole.

One factor supporting the good position enjoyed by the German automotive industry in China is the fact that most of our cars for China are built here. Passenger car production by our member companies in China has nearly trebled since 2010 – from 1.8 million cars to a good 5.1 million in 2018. In comparison with the previous year (2017), production has been increased by 5 percent.

We welcome the relaxation of regulations governing joint ventures, which will come into effect for the passenger car sector in 2022.

The high level of local production corresponds to the relatively low export figures from Germany to China: in 2018 the number was 287,300 passenger cars.

Furthermore, the value of parts and components imported from China to Germany in 2018 added 15 percent to reach 1.8 billion euros.

Task for trade-policy: mutual market access for products and investments

For Germany and the EU, and also for China, international trade and cross-border investments are important foundations for growth, prosperity and employment. Precisely in times of uncertainty and increasing protectionism, it is important to keep to the world trade order and rules-based trade.

We support the efforts of the EU to reform and strengthen the WTO. China plays a very important role within the WTO. Since joining the WTO in 2001, China’s economic power has greatly increased, and that also applies to trade. China is continually opening up to the global economy. We support this process. In doing so, we are backing mutual market access for goods and investments, close cooperation in the WTO, and successful negotiations with the European Union for a bilateral investment agreement.

The trade dispute between China and the US has negative effects also on the German automotive industry. We are the largest exporter of cars from the US. More than half of the approx. 750,000 cars we produce in the US are destined for export.

In 2017 the German OEMs exported around 150,000 cars built in the US to China. That is one fifth of all new German cars manufactured in the US. Owing to the trade conflict, in 2018 only 95,000 new cars from German OEMs were exported from the US to China (-36 percent).

We all know that penalty duties always elicit retaliatory measures, which can lead to spiraling isolation. That cannot be allowed. We therefore back constructive solutions in all trade disputes. And we welcome the fact that the increased import duties have currently been suspended, as both the US and China regard the current talks as positive. We hope – in the interests of our companies and the entire global economy – that the differences will be eliminated as quickly and as comprehensively as possible.

There is no question: China’s weight and importance in world trade and globalization are increasing. In view of the uncertainty in many countries and the growing protectionism, what is needed now is to utilize the opportunities that our partnership with China offers for Germany and for the EU. They include cooperative projects in the areas of new mobility and new energy vehicles. Here we favor sustainable and competition-neutral regulatory conditions that allow our targets to be reached through joint efforts.

German suppliers strengthen their presence in China

The German suppliers have supported and enabled the ramp-up by the German auto makers right from the outset. They were present locally at an early stage, and all major German suppliers are active in China. At this time, German suppliers operate 315 facilities in China, and Industry 4.0 has already been realized in selected production plants. In comparison with 2010 (180 plants), that is a rise of 75 percent. During recent years, medium-sized firms have also become increasingly active. Their customers include, alongside the German brands, international and Chinese automotive manufacturers. German suppliers have created additional new jobs here. Their workforce has shown marked double-digit growth in recent years and exceeded the 100,000 mark.

The following firms are showing their products and innovations here at the German pavilion: Boge Rubber & Plastics Group; Bühler Motor GmbH; Carcoustics International GmbH; Carl Bechem GmbH; Ernst Metal Technologies (Wujiang) Co., Ltd.; Fraenkische Pipe-Systems (Shanghai) Co., Ltd.; Gemo G. Moritz GmbH & Co. KG; Isabellenhuette (Shanghai); Jaeger Poway Automotive Systems (Shenzhen) Ltd.; Kirchhoff Automotive GmbH; Orap GmbH; PWO High-Tech Metal Components (Suzhou) Co., Ltd.; Silver Atena Electronic Systems Engineering GmbH; SingerTech Research & Development GmbH; Sonderhoff (Suzhou) Sealing Systems Co. Ltd.; Witte-Velbert GmbH & Co. KG; and Witzenmann GmbH.

We regard this strong German presence as a clear desire on the part of the companies to further extend their commitment on this, the world's largest passenger car market. And we support the contacts between the Chinese and German automotive industries through our CEO/President Round Table events here in Shanghai. The conditions for even greater engagement by our member companies, particularly the suppliers, here in China, are good: in the medium term this major national economy will remain on a growth path, and Chinese customers are evidently very keen on the product quality from German OEMs and suppliers.

China – largest market for electric cars with rapid growth

In the field of electric mobility, too, China is making the running. There is no other country where more new e-cars are being registered. In 2018 the figure was around 1.1 million vehicles (one quarter of them plug-in hybrids/PHEVs and three quarters battery-electric/BEVs), which is an increase of a good 80 percent on the previous year. The proportion of electric vehicles in the overall Chinese passenger car market is 4.5 percent.

There is considerable future potential here particularly for the German automotive industry. In the coming years, German manufacturers will launch a large number of electric models onto the market, in many segments. We are confident that we can push up our share of the electric market in China (currently 5 percent). That will certainly be helped by the liberalization of the automotive market. Since 2018, firms without Chinese partners have also been allowed to build e-cars in China.

China and Germany – Cooperation in connected and autonomous driving

We are also participating in the rapid developments in China in digitization, and in connected and autonomous driving. The German automotive industry holds nearly half of all patents worldwide in this field. Chinese customers are especially interested in digitization. We welcome the fact that in 2018 a declaration of intent was signed between Germany and China, to drive these innovations forward together. Megacities and the geographical and climatic diversity in China provide good conditions for bringing these new technologies to market maturity. Cooperation with Chinese partners will accelerate implementation.

IAA in Frankfurt is undergoing a transformation, as is the entire sector

The Auto Shanghai is one of the most exciting automotive trade shows in the Asian region. And I will be delighted to see you again at the IAA in Frankfurt am Main in September. The VDA organizes the IAA and is giving it a new orientation. The IAA is undergoing a transformation, just like the sector itself. Automotive companies meet new digital players. The IAA is becoming more interactive, more connected and more digital. Trends and topics will be presented and discussed by representatives from many sectors.

The new IAA program is based on four formats: Conference, Experience, Exhibition and Career. The IAA Conference is a series of high-level events on four stages. IAA Exhibition is the name of the classical exhibition that showcases the whole value chain. IAA Experience brings experiences to the trade fair grounds, for example with an outdoor circuit, intensified test drives and a Kids’ World. IAA Career is designed for students, career entrants and professionals.

We are thus creating new offerings both for exhibitors and for visitors, and greatly expanding the nature of the IAA as an event. Our aim is to make mobility something to be experienced with all the senses at the IAA, like nowhere else: seeing, feeling experiencing and hearing about mobility.

For China, too, the IAA is becoming more and more attractive. This year there will be another IAA China Day with high-ranking participants. All further information can be found at: www.iaa.de.

The German pavilion is also represented on the internet with its own homepage, which enables contact with exhibitors even after the trade fair:

https://auto-shanghai.german-pavilion.com/en/german-pavilion/

But back to the Auto Shanghai: I wish all the exhibitors a successful trade show!

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