Press Releases

German automotive industry continues growth in China

Berlin, 20 April 2013


Statement delivered by Matthias Wissmann, President of the German Association of the Automotive Industry (VDA), at the VDA press conference at the Shanghai Motor Show on Saturday, April 20, 2013, 12.00 h


The VDA
welcomes you very warmly to its press conference here at the German pavilion at Auto Shanghai. With 30 exhibitors – all of them highly expert and innovative suppliers – the German pavilion is larger and more comprehensive than it was two years ago. Several major supply companies from Germany also have their own exhibition stands here in Shanghai.

The joint pavilion is supported by the German Federal Ministry of Economics and Technology. At this point we wish to thank the Association of the German Trade Fair Industry (AUMA), the trade fair company IMAG and the German Embassy for the outstanding work they have contributed together.

The German Association of the Automotive Industry (VDA) is headquartered in Berlin and has over 600 members. One of the special features distinguishing the VDA from similar organizations in other countries is that we represent both the vehicle manufacturers and their suppliers under a common umbrella.

Last year the German automotive manufacturers built 13.6 million passenger cars around the world, just over 8.2 million of them at sites outside Germany. This means that our production accounts for around one fifth of total global passenger car production. Our suppliers generate about 75 per cent of the value-added associated with these vehicles.

German manufacturers and suppliers have their own assembly plants in more than 70 countries.

In all, the German OEMs and suppliers have over 2,000 production and assembly sites in countries other than Germany. More than 200 of them are German suppliers’ sites here in China. Then there are also the numerous production plants of our manufacturers.

Chinas automotive market continues to grow

In recent years no other country has had such rapid automotive growth as China. Since the year 2000, the passenger car market here has expanded twenty-fold – from 614,000 units in 2000 to over 13.2 million new cars in 2012. This equals around one fifth of the global market. And since the year 2008 (5.7 million passenger cars) the market volume in China has more than doubled. This dynamic process is accompanied by significant growth in the gross domestic product, a rising standard of living, and huge expansion of the road infrastructure. Furthermore, the average age of the Chinese population is 36 – which makes the Chinese on average nine years “younger” than the Germans.
China is an example showing that people’s desire for individual mobility, for a car of their own, and personal use of a vehicle, is found in all cultures and all continents.

The worldwide potential is nowhere near exhausted. The level of motorization in China is still relatively low. The passenger car density is 37 units per 1,000 inhabitants. For comparison, in Germany it is 525 per 1,000 inhabitants.

Last year the Chinese passenger car market grew by 8.4 per cent. Demand was also keen at the beginning of the current year: in the first quarter of 2013, passenger car salesshowed a year-on-year increase of over 25 percent to over 3.9 million units. Sales rose by one fifth in March alone, to reach nearly 1.4 million new cars.

However, it would be inappropriate to extrapolate the entire year from this. Our conservative forecast assumes that over the year 2013 as a whole the Chinese passenger car market will expand by 6 percent to about 14 million units. It will then already total 2.5 million vehicles more than the Western European car market.

German manufacturers increase their market share to over one fifth

The great competitiveness of the German automotive industry is underscored by the fact that it was not only able to keep up with the high speed of developments here in China, but the German group brands are in fact still growing faster than the market itself.

Around 30 years ago German OEMs were among the first international companies to become active in China. So we have not jumped on the bandwagon, but actually our technology and our investments have made a key contribution to China as an automotive country continually pushing up its rev.. At an early stage this created the foundations for the welcome development of our member companies in China.

Since 2009 we have pushed up our market share by 4 percentage points to 21.4 percent. During the same period the German vehicle makers have almost doubled their passenger car sales in China to 2.84 million units (cf. 1.46 million units in 2009). Compared with the year 2006 (0.74 million units) we have in fact quadrupled our sales of cars.

This year so far we have also enjoyed positive growth. Our market share climbed to 21.6 percent in the first two months. So more than one new car in five sold in China today is from a German group brand.

Local production up by more than one third

Of course, this success is not solely due to exports from Germany. In China, as in all other major automotive markets, we are pursuing our “two-pillar strategy” that comprises exports from Germany along with local production. Since 2005 we have increased passenger car production in China seven-fold, to reach 2.9 million units in 2012. Last year alone, we saw growth of 36 percent (from a good 2.1 million units in 2011). And in the current year this process will be continued.

The huge increase in China’s importance as a production location for the German automotive industry can be seen from a longer-term comparison. In 2000 German passenger car production in China still accounted for 9 percent of total foreign production by German OEMs. By the year 2012 this proportion had risen to 35 percent.

Therefore more than one third of all cars that German manufacturers produce at international sites outside of Germany is built in China.

Let me give you another illustration of the increasing significance of this automotive country. Today German manufacturers in China produce more cars than they do in the entire European Union (excluding Germany), where the 2012 figure came to nearly 2.8 million units.

Since the year 2000, China’s share of total passenger car exports by German makers has gone up by a factor of seven. In 2012, 284,700 passenger cars from German OEMs were exported to China. In that year exports of cars from Germany to China had a value of just over 12 billion euro.

However, not only Germany benefits from this two-pillar strategy – exports combined with foreign production. This development brings advantages for China, too. Local assembly has demonstrated faster growth than the exports from German plants. Today, looking back, this appears comprehensible to us – against the backdrop of the large Chinese market and the need for firms to have their own production locally. Yet this development is based on early and very far-sighted decisions on the part of the companies.

China attaches importance to having the highest possible amount of “local content” in vehicles. In this area German manufacturers and suppliers have made a considerable contribution in recent years.

When looking at the statistics one should note that certain models, that until one year ago were still included in the figures as exports from Germany, now appear as vehicles produced in China, owing to their higher proportion of value-added. And the trend is continuing this year. This means that exports to China will tend to grow more slowly than local production.

There are great opportunities for Germany continuing to participate in deeper cooperation with China in the coming years. We can learn a lot from trade shows such as Auto Shanghai. By drawing our attention to the necessary activities abroad they show us very clearly that we also have to carry on working on our competitiveness at home, to our mutual benefit.

Germany’s competitiveness as a production location – which we have increased over recent years – must, in view of the dynamic developments in other countries, be maintained and expanded.

German suppliers with strong presence in China

German suppliers have been involved right from the outset as the German passenger car manufacturers established high levels of activity here in China, and were one factor in making this possible. They too were here early on. All the major German suppliers are active in China. In recent years medium-sized firms have also been increasingly active. Their customers include – alongside the German brands – many international and Chinese automotive manufacturers. The number of assembly plants of German suppliers here in China has grown in the last two years by more than one third to exceed 200 sites. The number of employees at German suppliers in China has increased by a good 15 percent to over 70,000.

China is also becoming more and more important to Germany as a supply location. In 2012 exports of parts and accessories from Germany to China had a value of 7.7 billion euro. That is 30 percent up on the previous year’s value.

Our German pavilion offers more suppliers the opportunity of establishing and expanding activities here in China. Thirty of our medium-sized companies are using this opportunity and have presentations here at the trade show. Most of them already have their own production plants in China, and some of them also have joint ventures or subsidiaries here. And they want to continue investing. This all shows that this market offers an enormous potential to medium-sized suppliers in particular. We, the VDA, are delighted to be able to support this commitment.

The spectrum of products offered by these companies is impressive. Many of these innovations are on display here at the pavilion, for instance those from the areas of acoustic insulation, thermal management, novel sensors, spring technology, locking systems, range extenders, and solutions for reducing emissions and optimizing weight.

You are cordially invited to come and see these innovative products. The pavilion flyer will give you some initial insights. And our exhibitors will of course be happy to provide more detailed information.

For our suppliers, Auto Shanghai is the most important of the international trade shows after the International Motor Show (IAA). Auto Shanghai shows a cross section of the German suppliers. A walking tour of the exhibition should include the companies at this German pavilion and our suppliers who are here with their own stands, such as Bosch, Brose, Continental, Knorr-Bremse, Schaeffler, Webasto and ZF.

VDA Quality Management Center (VDA QMC China) supports suppliers

The VDA also directly supports its member companies here in Beijing and Shanghai through its Quality Management Center (VDA QMC China). Its task is to develop suppliers locally.

In addition, here in China we have set up a “Round Table” for the China managers of our suppliers, promoting the exchange of ideas and experiences and also dialog with German and Chinese customers. So VDA will continue to support closer local Sino-German cooperation in China.

Chinese passenger car market is technologically demanding

The Chinese market not only demonstrates high growth rates – its structure is also changing. In China there is a clear trend towards smaller engines characterized by lower capacity and consumption, rising efficiency and turbocharging. For example, since 2008 the share of vehicles with larger engines (2.0 to 2.5 l) has fallen from 11 percent to 8 percent, while the share with smaller engines (1.1 to 1.6 l) has recorded strong growth – of 6 percentage points to nearly 58 percent. The proportion going to the medium category (1.6 to 2.0 l) remained almost unchanged.

The proportion of vehicles with alternative drive trains is still very low, although there is considerable growth in electric and hybrid vehicles. In China the classical gasoline motor obviously still dominates, while the share of diesels among passenger car sales is 0.5 percent. Just for comparison, the proportion of diesels in Western Europe is around 55 percent.

The trade show clearly confirms that China is increasingly developing into a market with high technological demands. Optimization of the transmission in passenger cars with classical internal combustion engines has high priority – partly due to the stricter mandatory emission levels. China is also pushing forward the development of electric mobility. In these two fields, our manufacturers and suppliers have a high degree of expertise that is very much in demand on this dynamically growing market.

Numerous premieres by German premium manufacturers

With continual growth in GDP, China is developing a middle class with significant disposable income and which includes many potential buyers of new cars. That benefits the German brands in particular. Their share of the premium market is also over 80 percent in China.

This is emphasized by the premieres presented by the German OEMs here in Shanghai. They are tailored to the Chinese customers who are very keen on automobiles.

I will mention just a few examples:

Audi is presenting the new A3 sedan and its sports version, the S3 sedan, for the first time. So the third chassis in the Audi A3 family is having its world premiere here at the show.

BMW is showing the Concept X4 (soon to go into series production), a Coupé version of the X3. We also have the Asian premieres of the BMW Concept Active Tourer, and – the Chinese premiere – of the BMW M6 Gran Coupé and the BMW 3-Series Gran Turismo. Moreover, Mini is bringing its John Cooper Works to China, and Rolls-Royce is celebrating the Asian premiere of the Wraith.

Mercedes-Benz is unveiling the Concept GLA, the concept vehicle of a compact SUV, which is based on the vehicle architecture of the A and B-Classes and will be launched on the market next year. There is also the debut of the new long wheelbase E-Class, which will be built solely in China and solely for this major market. In addition, we have the Chinese premieres of the new E-Class, the CLA, the new A-Class and the CLS Shooting Brake.

Porsche is celebrating the world premiere of the new Panamera here in Shanghai, including a variant with plug-in hybrid drive and a variant with a long wheelbase.

We see that in China, too, there is a trend towards lifestyle. The German manufacturers are meeting this demand with their highly attractive models that add to the existing range.

Rapid expansion of road infrastructure offers opportunities

The number of Chinese cities with at least one million inhabitants is increasing. For this reason we are driving forward technologies for urban mobility. But we also have our eye on the infrastructure of the entire country: the freeway network in China is being expanded at breath-taking speed. Last year alone it grew by over 12,300 kilometers to a total length of 97,300 kilometers. This means that since the year 2011 it has been the largest in the world (with the USA in second place). By comparison, the entire autobahn network in Germany has a length of 12,845 kilometers.

In other words, within one year China has constructed additional new freeways whose length equals that of the complete autobahn network in Germany. And there is no end to this process in sight, with many more sections being planned.

All the indicators – passenger car density, income trends, and infrastructure – therefore point to more growth of the Chinese vehicle market in the coming years.

The German automotive industry – manufacturers and suppliers alike – will continue to increase their commitment on this important market. The drive for innovation that our exhibitors all demonstrate here at Auto Shanghai forms the basis for future success.

Looking forward to the 65th IAA Cars in Frankfurt am Main

Auto Shanghai is one of the most exciting automotive trade shows in the Asian region. I will be delighted to meet with you again at the 65th International Motor Show (IAA) Cars. The VDA organizes the IAA Cars, which will open its doors in Frankfurt am Main, Germany, in September. In addition to the further progress in vehicle efficiency – just think of CO 2 reduction and lightweight construction – a particular focus will be on “connected driving.” We expect a large number of world premieres at the IAA. And naturally we are especially looking forward to once again welcoming an increasing number of Chinese exhibitors to this IAA.

T
he international press will also be very welcome at the IAA. Please mark the dates for the 65th IAA Cars in Frankfurt in your diaries. It will take place from September 12 to 22, 2013, and the Press Days will be September 10 and 11. Its slogan will be, “The world’s most automobile show.” You can find all the further information on the Internet, at www.iaa.de.

Summary - for deeper cooperation between Germany and China

Please allow me to close with a fundamental remark.

Auto Shanghai unites the international automotive industry at a politically exciting time here in China. The new Government of the People’s Republic began its work just a few weeks ago.
Cooperation between Germany and China can now draw on many years of experience that have been successful for both sides. We want to build on the confidence of our Chinese partners in our capabilities and in the quality and reliability of our products and companies.

German manufacturers and suppliers enjoy an excellent reputation here in China. We wish to thank you for your confidence – and regard it as an obligation to continue our high speed of innovation. The firms exhibiting here at Auto Shanghai are presenting very innovative products that demonstrate high quality “Made in Germany” – irrespective of whether they are assembled in Germany or here in China.

I am happy to stress our expectations at this trade show. We want to work together to intensify our relations, in our mutual trade and our investments. The figures I have outlined here are an impressive expression of German activity both with and in China.

China has been a member of the World Trade Organization (WTO) for more than a decade. We hope that this cooperation on common international basic principles will lead to joint success. And we want to intensify cooperation with Chinese partners in China and in Germany.

Of course, this also applies to welcome Chinese investments in Germany and Europe. Concerning our activities in China we hope that together with our Chinese partners we will overcome the challenges of the automotive future. Important topics here are the introduction of new technologies, consumer protection and environmental conservation (CO 2 regulation being one example).

The German automotive industry is today the pioneer of further CO2 reduction

With our high R&D investments we are striving to bring CO 2 emissions down to zero, in China and other markets. The German automotive industry is today the pioneer of further CO 2 reduction in all cars. We are willing to enter into constructive dialog and cooperation. Here both partners can learn from each other.

I believe our mutual attention paid to automotive performance and individual exchange here in Shanghai is very beneficial.

The German pavilion is evidence of just how important the Chinese market is for the German suppliers. At the same time it demonstrates their high level of international competitiveness. Then there are also the activities of the more than 200 German automotive companies that are active here in China.

There is another aspect that is important to us. Above all it is the cordial Chinese hospitality, friendliness and people’s openness towards us, which mean that we are always happy to come to China and to Shanghai.

After this press conference, ladies and gentlemen, you are all warmly invited to visit the individual stands of the exhibitors here at the German pavilion.

Thank you very much for listening and we hope to see you in Frankfurt in September!

 

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