Traditionally the Geneva International Motor Show stands for the beginning of the “automotive spring.” And here on the shores of Lake Geneva the German manufacturers in particular are showing numerous innovations. Anyone taking a close look at the premieres will notice that the efficiency of the drive trains continues to improve – and at the same time the range of models that stand for the pleasure of driving is expanding.
The broad-based strategy that the German automotive industry has been pursuing for some years now – that is, simultaneously driving forward progress in various types of power trains – is consistently being made reality. This is demonstrated at the Geneva Motor Show by the following examples:
- The first plug-in hybrid from Audi (A3 e-tron) and the Audi A3 g-tron with a gas power train, which can be run on natural gas and on the new CO2-neutral fuel Audi e-gas.
- The upcoming BMW i3 is not only especially efficient, but while the vehicle is in motion it runs completely emissions-free.
- Ford is equipping its models with EcoBoost engines, which are turbo-charged direct injection petrol engines consistently developed in line with the principle of downsizing, especially the 1.0-litre, three-cylinder EcoBoost engine that has now won several awards.
- The Mercedes CLA 220 CDI emits only 109 g CO2/km (4.2 l/100 km), while the new E-Class BlueTEC Hybrid emits 107 g CO2/km (4.1 l/100 km).
- Opel is displaying its Zafira Tourer, whose clean diesel engine requires only 4.1 litres of fuel to cover 100 kilometres (109 g CO2/km).
- Volkswagen is here with its one-litre car, the XL1, a plug-in diesel hybrid with extremely low CO2 emissions (21 grams/kilometre), and the Jetta Hybrid, which is celebrating its European premiere here in Geneva (4.1 l/100 km).
The second key element from the German manufacturers is the component of sporty elegance in their models on display here in Geneva. May I mention just a few examples:
- the Audi RS 6 Avant
- the BMW 3-Series GT and M6 Gran Coupé
- Daimler has its Mercedes C 63 AMG, the top version of the new A-Class (A 45 AMG), the new E-Class and the CLA.
- For the first time Ford is displaying the European version of the compact SUV Ford EcoSport. This is an “off-road lifestyle SUV” that will be launched in Europe before this year is out.
- Opel is showing its new four-seater convertible Cascada.
- Porsche is presenting – in its anniversary year (50 years of Porsche 911) – the Porsche 911 GT3.
- Volkswagen has come with its seventh-generation Golf GTI, which produces 25 per cent more torque in comparison with its predecessor while remaining 18 per cent more economical, plus the Golf GTD with a powerful TDI engine (184 hp; 380 Nm torque) that makes driving fun and saving fun – it consumes only 4.2 litres over 100 kilometres.
Thirdly, the “connected car,” or CarIT, is clearly one of the core competences of the German manufacturers. Particularly in this field of technology, the speed of innovation is fascinating. Today cars and smartphones – backed up by driver assistance systems – are already two sides of the same coin.
The Geneva Motor Show therefore offers a foretaste of the comprehensive programme of innovations that you will see at the 65th International Motor Show (IAA) Cars in Frankfurt am Main in September. There are good reasons for this year‘s IAA slogan being “The most automobile show in the world.”
German models lead in quality rankings.
The new models are one aspect – the other is the quality and reliability of the cars that have already been running on our roads for years day in, day out, and often have hundreds of thousands of kilometres on the clock.
The core strategy of the German automotive industry – the highest product quality and the greatest customer satisfaction – has been impressively confirmed by the new 2013 DEKRA Used Car Report and the new 2013 TÜV Report.
For example, the Audi A4, the Ford C-MAX and the BMW Z4 are the winners in the 2013 DEKRA Used Dar Report. The Audi A4 successfully defended its title “Best of all Classes,” awarded to the vehicle with the best scores across all mileage ranges (up to 150,000 kilometres), beating off a challenge from the Mercedes-Benz C-Class. In the “Vehicle of the Year,” the Ford C-MAX and the BMW Z4 came equal first with the best quality, and third place went to the E-Class from Mercedes-Benz. For the DEKRA Used Car Report the experts evaluated results from a total of 15 million general inspections from the last two years.
German models also came top in the 2013 TÜV Report. The VW Polo won in the category of two to three-year-old vehicles. In total the TÜV experts examined over 8.1 million general inspections from more than 220 models. This top result shows that German manufacturers also build the most reliable cars in the small car segment in particular. Third place in the ranking went to the Audi Q5. Reliability, quality and value retention were also excellent in the Porsche 911: it came first in the vehicle categories six to seven years old, eight to nine years old, and ten to eleven years old. Furthermore, according to the TÜV Report the Mercedes SLK and the BMW Z4 are among the top scorers on quality.
We are therefore following these quality rankings very carefully because – according to the 2013 DAT Report – customers regard vehicle reliability as the most important criterion when buying a new car. After that come the car’s appearance, purchase price and fuel consumption.
Global passenger car market is growing – concerns in Western Europe.
Allow me to move on to the vehicle markets. Of course at present everyone is watching developments in Western Europe. Yet the German automotive industry is in a global position. The overall prospects are definitely positive: in 2013 the world passenger car market will expand by 2 per cent to 70.7 million units. We expect the Chinese market to increase by 6 per cent to 14 million units, while the US market will grow by 5 per cent to almost 15.2 million light vehicles. India and Russia are also expected to increase, reaching volumes of around 3 million passenger cars.
Our greatest concerns relate to the Western European passenger car market, which contracted by 8 per cent in 2012, to nearly 11.8 million new vehicles. The weakness in Western Europe – especially in Spain, Italy and France – is mainly affecting manufacturers and their suppliers whose main sales markets are in Europe and who are poorly represented or not present at all in the growth regions USA and China. Within the last five years, the Western European passenger car market has shrunk by three million units.
However, it would be wrong to project the future along these lines. Western Europe remains an automotive region.
Just how quickly markets can recover has been shown by the USA. In 2013 light vehicle sales there will exceed the 2010 level, reaching 3.5 million units.
The process in Western Europe will need more time. Yet in the medium term we can certainly expect to return to a markedly higher market volume. In the badly hit European countries in particular a potential need for vehicles to make up for those not bought earlier is becoming apparent at the moment, which will also be expressed in quality: future new cars will have much lower consumption and CO2 emissions.
For the year 2013 as a whole, we expect a fall of 3 per cent to close to 11.5 million new cars in Western Europe. One initial indicator that the countries especially hard hit by the crisis are getting back on their feet is the fact that in Italy and Spain the unit labour costs have been falling in real terms for some time now. This has also been observed in France in recent months. Naturally, here too the drop in employment in these countries is also a factor. But under the bottom line it means that the competitive position of these national economies can improve again.
Then there are also measures such as those in France: the structural reforms of the labour market, which the French employers’ associations and trade unions agreed in January 2013, could gradually ensure more flexibility and thus help keep costs down. This is a first, positive signal. However, it is crucial now that politicians fulfil their duty of tangibly increasing France’s competitiveness. Not only the financial markets are waiting for this, but so too are anxious European consumers!
To a large extent Italy can itself control whether and how rapidly consumer confidence recovers. This will also determine the recovery of the Italian automotive market.
The present difficult situation in the neighbouring European countries is something that makes us anything but happy. We Germans need our French and Italian neighbours for the automotive markets in Europe.
We expect the European Member States to introduce reforms to improve their competitiveness for positive development again. However, this will not be enough on its own. The European institutions will also need to take action.
We need a policy in the EU that puts industry back in the central focus, instead of placing excessive demands on it. It is crucial that the EU achieves the necessary balance between climate policy and industrial policy.
In our sector the objective is the 95-gram target, which the plans of the European Commission stipulate should be achieved by the year 2020. That corresponds to a reduction of approximately one third compared with the baseline value of 141 grams of CO2 per kilometre (from 2010).
We stand by this target and are working intensively on the continuing reduction of CO2 emissions from our vehicles. But bureaucratic hurdles must not make this demanding goal even more difficult to achieve. Instead, all the flexibilisation options have to be exploited in order to drive innovation forward at high speed. This includes super credits for the CO2 emissions from vehicles with alternative drive trains, as is the case in comparable regulations in China and the USA.
A new study has confirmed this position. The university RWTH Aachen has just presented a study commissioned by the German Federal Ministry of Economics which investigated the “CO2 reduction potentials of passenger cars up to 2020.” It found that the limit value proposed by the European Commission was a “key challenge” for the European automotive industry. The goal could not be achieved using classical drive trains alone so cars with alternative drive trains would also be needed.
The costs of the complex drive train technologies “cannot be borne solely by the vehicle manufacturers themselves, but must be passed on to the customers,” the study emphasised. In the “realistic scenario” it projected that buying a new car would be much more expensive for motorists, and in addition the carmakers’ manufacturing costs would rise considerably.
Even if this higher purchase price is juxtaposed with lower fuel costs, according to the study “selected flexibilisation measures” such as super credits and eco-innovations will be absolutely necessary to make progress.
To put it in simple terms: the 95-gram target cannot be achieved in a way that is cost neutral for motorists – or maybe only over a long period of use. Those familiar with the passenger car markets know just how price-sensitive customers are. The European Commission should therefore exhaust all possibilities for accelerating new technological developments and creating incentives for progressive innovations.
Ifo business expectations: car manufacturers again in the “upswing quadrant”
But back to economic developments. Germany is still a rock of stability in the Euro zone. In December industrial production in Germany again demonstrated a slender rise over the previous month. The early economic indicators also show an improvement: the Ifo Business Climate Index has been climbing continually for four months now. It is remarkable that in February companies’ expectations turned strongly positive again for the first time after being negative month after month since May 2012.
It is especially welcome that the business climate in the automotive industry has improved, reaching almost 15 points, which is more than twice the rise in the processing industries as a whole. The passenger car manufacturers in Germany do indeed regard the current business situation as modest. However – and this is the surprising thing – their business expectations are tangibly more optimistic than they were even one month ago. In the language of the Ifo Institute this means that the German carmakers are therefore back in the “upswing quadrant” for the first time since autumn 2011. This is reason to be confident.
This view is supported by a Europe-wide survey carried out by Ernst & Young in January at 300 companies in the automotive industry. It found that 78 per cent of all respondents expect their business situation to improve in the coming six months, while one in ten actually expects a “marked improvement.” In Germany the automotive companies – manufacturers and suppliers alike – are even more optimistic. Nine out of ten of them expect to see an improvement. This is no reason for euphoria, but the view forwards suggests grounds for optimism. In a situation like the one we have now, it is expedient to pay more attention than usual to the early indicators.
Let us avoid any misunderstandings: it will be a hard, long and stony road. But it will be worth it. The importance of Western Europe and Germany for the German automotive industry now and in the future is shown by the fact that at home we take a market share of 70 per cent, and a market share of 50 per cent in Western Europe.
Irrespective of the present difficult situation in Western Europe, however, it is also clear that the real growth regions are China, the USA and Russia.
The German group brands benefit from their good position around the globe. In 2012 they pushed up their market share in the USA to 8.8 per cent (cf. 8.2 per cent in 2011), while in China they reached 21.4 per cent (19.5 per cent in 2011), and 20.9 per cent in Russia (18.0 per cent in 2011). In China alone, the German group brands increased their 2012 passenger car sales by 19 per cent to 2.8 million units.
For the year 2013 as a whole we expect the German car manufacturers to export a total of nearly 4.2 million units, which is roughly the level seen in 2012.
International production structure stabilises Germany.
These market successes are also partly due to the German automotive industry strategically establishing and expanding its world-wide production over recent years. In the year 2000 our manufacturers produced a global total of just over 8.8 million passenger cars, 58 per cent of them at home. In 2012 they built 13.6 million cars around the world, 40 per cent of them at home. That this internationalisation was good for Germany as an automotive location is shown by domestic passenger car production climbing to 5.4 million new cars in 2012 (cf. 5.1 million in 2000). In the current year we expect production to more or less equal the amount recorded last year.
It is also obvious that stabilisation of the European market will benefit the German OEMs and in particular the German assembly plants.
So far the rule of thumb has been that three new jobs abroad either safeguard or create one job in Germany. However, this relationship a not a natural law – we must do everything we can to keep Germany competitive as a production location in the future. This includes politicians and the public recognising just how strategically important the premium segment is for Germany as an automotive location: at present the premium segment accounts for 57 per cent of all domestic passenger car production, whereas twelve years ago the figure was only 46 per cent. At the carmakers alone, 60 per cent of all our jobs in Germany depend on premium. That is over 200,000 employees at our manufacturers, and many at the suppliers as well.
Premium continues to pick up.
Furthermore, for a long time now premium has no longer been defined as “longer, wider, heavier.” Quite the opposite: the German manufacturers have premium vehicles on offer in virtually all segments from luxury vehicles and the medium segment all the way to the premium compact class, which have actually been created by our brands. And most recently even the first premium small cars have entered the German market – they are all from our manufacturers. Premium is characterised by the highest quality and the best value retention, fascinating design, attractive interiors, the most advanced connected driving, the most efficient motorisation, low CO2 emissions and the highest safety standards. Our share of the global premium market comes to 80 per cent – this position has to be maintained and consolidated!
Another factor in the success of the German automotive industry is our technological pole position in the clean diesels: 55 per cent of all passenger cars newly registered in Western Europe have a clean and economical diesel engine. And just over half of all new diesels sold in Western Europe bear a German badge.
We are delighted that the “Clean Diesel. Clearly Better.” campaign for the US market, which was developed jointly by the VDA and our member companies (www.clearlybetterdiesel.org), has had a good reception. Our common goal is to give clean diesels a multi-brand information platform for the US population and to raise awareness of the clear advantages of this technology by providing first-hand information. Now the first US competitor (GM) has decided to offer a passenger car model (the Chevrolet Cruze) in North America with a diesel engine. We welcome this, even if it means that the diesel car market share going to the German manufacturers in the USA, which has been 100 per cent for several years, may go down a little.
Domestic passenger car market and exports decreased in February.
This brings me to the current figures. In February 2013, 200,700 passenger cars were newly registered in Germany, which is a year-on-year fall of nearly 11 per cent. However, this year’s cold February had one working day less than February 2012. For the year overall we are keeping to our forecast of around 3 million new passenger car registrations at home, because we expect to see more activity on the market in the second half-year.
However, our manufacturers are currently still feeling the effects of the weakness on the European market. It therefore comes as no surprise to us that passenger car exports slumped by 10 per cent in February to 358,200 units. The companies accordingly reduced their car production by 8 per cent to 466,100 vehicles.
Please allow me to summarise. The initial months of the year 2013 were marked by the weak demand in Western Europe. Even the German passenger car market was not able to escape this trend completely. On the other hand, one must remember that the figures from the same period last year were very healthy and the economic prospects only started to worsen in the early summer of 2012. This results in an underlying effect, especially in the first half-year of 2013. We expect the market to recover in the second half of the year.
The number of new registrations over the entire year should therefore not be extrapolated from the figures for the first two months. Instead we expect to see stable development on the domestic market, and also in exports and production. The latest figures from the Ifo Institute for business expectations in the automotive industry are reason for cautious optimism.
However, as I already said last December, 2013 will be a year of demanding work. A lot will depend on whether politicians manage to overcome the crisis in Europe and generate more public confidence. The German automotive industry – the manufacturers and the suppliers – has done its homework. And in fact it is driving up its speed of Innovation, as shown by the new models here in Geneva.
|February 2013||January - February 2013|
|Passenger Cars *)||Units||Change 13/12 in %||Units||Change 13/12 in %|
|German makes incl. group makes||140.200||-11||277.700||-8|