VDA President appeals for more courage and confidence at Handelsblatt Auto Summit: We will tackle the tasks and resolve them
- People’s desire for individual mobility is increasing worldwide
- Cars are better now than ever before
- Model offensive for electric cars
- Companies make major contribution to expanding the charging infrastructure
- Climate protection and sustainable individual mobility are two sides of the same coin
- Innovation instead of prohibition
- Strengthen Germany as an industrial location
Statement delivered by Bernhard Mattes, President of the German Association of the Automotive Industry (VDA), at the Handelsblatt Auto Summit 2019 in the Porsche Museum in Stuttgart on October 24, 2019
Ladies and Gentlemen,
“Where does the automotive industry stand, and when will the innovations be seen on the roads?” These are the two questions the Handelsblatt has asked in this part of the Auto Summit 2019.
I would like to add the question “Where are we going?” What prospects does this industry have?
It may come as a surprise when I put forward the thesis that for the automotive industry – and above all for the German auto industry – the best times are still to come.
- Because we have the world’s best expertise in product and process integration and innovation along a highly complex value chain.
- Because we have implemented and developed Industry 4.0 at the highest level.
- Because we have developed a value chain consisting of small and medium-sized companies, startups, science and research, and large industrial companies, which remains unrivalled.
That is what we have achieved. Now let’s look at what is to come:
- Because around the world people’s desire for individual mobility is not diminishing, but growing stronger all the time.
- Because cars have ended the debate centering on pollutant emissions (such as NOx and particulates) and, especially in the case of electric vehicles, on CO2.
- Because electric mobility enables sustainable and zero-emission mobility, and other alternatives will expand the mix.
To this we can add the huge opportunities offered by digitization and connectivity, especially in the field of urban mobility.
Let us be quite clear: of course we are facing enormous challenges – concerning the economy, trade policy, climate policy, and technology. In addition, new providers are appearing on the market, so the competition will get tougher.
But precisely for this reason I am sure that the German automotive industry will emerge from this transformation stronger than before. A review of the last 30 years, which have not been a walk in the park by any measure, puts me in a confident mood: our member companies – manufacturers and suppliers – have continually improved their products by investing heavily in R&D, and have steadily expanded their international position. This applies above all to the premium segment.
We have no reason for despondency. It is not the makers of vacuum-cleaners, the postmen or the hi-tech firms that launch innovative vehicles onto the market. We tackle the tasks and resolve them. I am going to go into more detail on the individual points.
A look at the public discussion in Germany during recent months could give the impression that cars have lost their attraction and no longer interest the general population. Is that really the opinion of “society”?
Here are the facts:
- The global passenger car market has grown by 47 percent since 2009 – to 84 million vehicles in 2018.
- Internet sales, the logistics of the “last mile” and changing consumer behavior have led to more than a doubling of the number of CEP packages sent in Germany since the beginning of the millennium – to 3.5 billion (2018). Every day, 12 million packages are sent to 7 million recipients. And the number is still increasing.
- More than 3 million passenger cars are newly registered in Germany each year. In 2018, customers paid on average over 31,000 euros for their new cars (DAT Report 2019) – in recent years the value has always risen.
- Added to this, there are over 7 million transfers of ownership. So we are talking about a good 10 million purchasing decisions per year.
- The passenger car fleet currently totals about 47 million – which is more than ever before. What is more, nine out of ten of these cars are privately owned.
- Germany has 566 passenger cars for every 1,000 inhabitants.
- And by the way, the number of people aged between 18 and 24 who have a car has also been increasing for several years now. In 2018 the level of ownership in this age group was 168 cars per 1,000 people, whereas in 2017 it was 166, and in 2016 it was 164.
- In Germany 56 million people possess a driver’s license – i.e. four out of five adults (aged over 18).
So it is all the more important to harmonize the overarching social concerns: to safeguard individual mobility and simultaneously make progress on climate protection, a clean environment, road safety, and liveable cities.
Therefore, our cars are becoming ever safer, more economical, more efficient, cleaner and more convenient. “Cars are better now than ever before.” This was the title used by the German trade journal “auto motor und sport” for its extensive recent report.
The ams journalists themselves were amazed by the maturity that cars have attained:
- Today cars are much more reliable and last far longer than before, namely 18 years.
- They have much lower consumption.
- Modern cars have only very low pollutant emissions, also in real driving conditions.
- Modern cars are safer than ever before.
- Furthermore, assistance systems and connectivity are increasing the level of comfort.
The editors concluded there is no reason to suppose that this development will now suddenly come to an end – which I can only underscore. This is not a choice between climate protection and cars. Instead the question is how we can satisfy both requirements together – CO2-reduction and sustainable individual mobility. Anyone who thinks all of that could be achieved principally by banning vehicles, has got it wrong – economically, ecologically and politically. Individual freedom, individual mobility, economic growth and sustainability all belong together – they are part of our open, democratic western world. Here it should be especially stressed that individual freedom cannot be totally unrestricted and is embedded in a legal system that ensures internal and external security and a functional administration and infrastructure.
But this also means that political will is formed in a democratic discourse that does not exclude those with other opinions, but lets them have their say. All sides can put forward their arguments. We have conducted this dialogue – both before and during the IAA – and we continue to do so, in particular with our critics. We are convinced that it is always better to talk with one another than about one another.
On the other hand, those who put stigmatizing stickers on other people’s cars (SUVs), or block the IAA for a whole day or paralyze key transport hubs (such as in Berlin) for weeks, or who occupy the unloading ramp of a car carrier in Bremerhaven’s Nordhafen and prevent SUVs from being unloaded, have to ask themselves how compatible that behavior is with the famous freedom for people with other opinions. It is not appropriate in an open-minded and innovative society.
We, too, want to contribute to climate protection and we will do so. However, this contribution does not consist of banning orders preventing citizens from using their cars, but of technological innovations. Technical progress improves our environment and creates employment and prosperity. Here I see our industry as being on the right track: by 2023 we will increase five-fold the number of e-models on offer to over 150, and during the next three years we will invest a good 40 billion euros in electric mobility.
So when the question is asked, “When will we see the innovations on the roads?” the answer is, many of them are already here. Numerous assistance systems – proximity control, the night vision assistant, emergency braking assistant, tire pressure sensor, lane-keeping assistant, and the lane change assistant – have made great improvements, especially to active vehicle safety.
I am including here the adaptive forward lighting and cornering light, and the high-beam assist. When it comes to convenience, we have the parking assistant, the reversing camera and the head-up display. Connectivity is finding its way into vehicles via Bluetooth, the internet and navigation systems – combined with voice control. This is an ongoing process that is not going to stop one day, but will take us further and further forward. It includes – alongside electric mobility – digitization, connectivity and automated driving. We will spend around 18 billion euros on these aspects alone over the next three years. This permanent will to innovate has made us the leading branch of industry – and we are going to maintain that position.
The EU’s very challenging CO2 targets for 2030 can be achieved only with the rapid and sustainable ramp-up of electric mobility. In concrete terms, this means that 7 to 10.5 million e-cars will have to be on Germany’s roads by 2030. This is more than the market launch of an innovation – this is about a politically and socially driven shift to a new system. For this reason, the range of e-vehicles on offer has to be rolled out on a massive scale. Enjoy the new technologies!
However, market penetration also requires the corresponding charging infrastructure, which demands action from the policymakers. The charging infrastructure in public and private spaces must be expanded swiftly and sustainably to provide universal coverage. Today’s number of a good 20,000 public charging points is insufficient. By 2030 we will need 1 million public charging points, an additional 100,000 fast charging points and several million private charging points.
Politicians have made some important preparations at national level. That is a step in the right direction. But the municipalities must also work intensively on this topic. They know better than anyone where the demand for electricity to recharge vehicles is the highest, how much space is needed, and how to approach the retail trade and car park operators. The municipalities are the ideal bodies to steer the expansion of the charging infrastructure.
The German vehicle industry also makes a considerable contribution. Today manufacturers and suppliers already have well over 5,000 charging points available at their facilities – for employees and customers. The number of corporate charging points will rise strongly because business premises are an excellent place for charging vehicles. We expect that by 2030 our member companies will have installed around 100,000 charging points at their German sites.
Furthermore, the auto industry is instituting a whole package of measures to make charging simpler for customers, for example by supporting charging at home, procedures for vehicle charging, information about access to the public charging infrastructure, and roaming.
In addition, together with the joint venture Ionity the automotive industry is very rapidly establishing a fast charging network along the main transportation routes. By the end of next year there will be around 100 of these charging sites in Germany, and more than half of them are already in operation. As you can see, even if building the charging infrastructure is not our core business, we are pressing ahead, because we want success – successful electric mobility.
Our attention is currently focused primarily on electric mobility (BEVs/PHEVs), but we are not closing our eyes to other options. Hydrogen cells and fuel cells remain on the agenda along with climate-neutral synthetic fuels (e-fuels). After all, we need them when it comes to achieving the 2050 climate targets. Moreover, the modern internal combustion engine will still be needed for many years to come – in Germany, in Europe and worldwide. In Europe in particular, efficient and clean diesels are indispensable for reaching the CO2 targets. It is remarkable that in the first nine months of the current year the German group brands pushed up their sales of diesel passenger cars in Germany by 8 percent, and in September alone they recorded a rise of 32 percent. Obviously more and more customers are recognizing the advantages of modern diesel cars – and that is good both for the climate and for the CO2 footprint of our companies.
Of course, we are aware of the economic and trade risks that we have to deal with at this time. This year the Chinese market will shrink once again. However, during the first nine months the German OEMs managed to buck the trend and expand their market share in China to 24.5 percent (last year: 22.1 percent).
In Europe and the US we expect levels to be slightly down on last year. Impulses driving growth are currently lacking. This is tangible for OEMs and suppliers, and they are reacting – with efficiency-raising programs, cost-cutting and model offensives.
Let us be quite clear: the times are getting tougher. But this industry has always stood up to the competition and it has the necessary flexibility, determination and know-how to withstand crises. Yet this is going to be a huge challenge for all of us. For policymakers it means that it is high time prepare Germany as a production and innovation location for the hard times ahead. This will involve energy costs, corporate taxes, and non-wage costs. The points of leverage are known and only have to be used.
What the companies don’t need right now is additional burdens, because the trade risks have not been cleared away by any means. This applies to Brexit just as much as to the trade tariff disputes between the US and the EU. As an exporting country, we will continue to need free access to the world's markets. This will be one of the main tasks for the new European Commission.
Please allow me to summarize:
- We have the best expertise in the world in product and process integration and innovation.
- We are implementing Industry 4.0 and driving it forward.
- We have developed a value chain that includes small, medium-sized and large companies, along with startups, science and research – and that is unique throughout the world.
- Around the globe I see people’s strong desire for sustainable individual mobility. Our industry supplies the answers: new, convincing products, connectivity and digitization.
- The German automotive industry is rolling out its model offensive for vehicles with electric drive – and making a considerable contribution to creating the charging infrastructure.
- Individual freedom and individual mobility belong together. They are a precious asset that we will defend.
- Climate protection and automobiles are not opposites, but two sides of the same coin. People want both. Modern cars are part of the solution, not part of the problem. Our “recipe” is innovation instead of prohibitions.
- In view of the economic and trade-related risks, we must make Germany as an industrial location so fit that it can pass the next “Iron Man” contest. The time for redistribution is over; we need greater efficiency.
- If we – policymakers, the industry and the trade unions – all pull together, we will have every opportunity to boost growth, innovation and prosperity in Germany, also during the next ten years.
- Germany needs more courage, more confidence and more creative drive – here the German automotive industry is assuming the role of pioneer! We are bringing innovations successfully onto the roads – both now and in the future!