Further expansion of production – high growth rates among hybrids and electric vehicles
Ladies and Gentlemen,
it gives me great pleasure to welcome you to our press conference here in Detroit. We are happy to be here because in 2013 the US market showed some very welcome development: sales of light vehicles (passenger cars and light trucks) rose by nearly 8 percent to 15.5 million units. Compared with thecrisis year of 2009, the increase is even greater: since that time the US market has expanded by around 50 percent, or a good 5 million new vehicles. One could almost quote Arnold Schwarzenegger saying, “I’ll be back.”
The general economic data also remain positive. Both the labor market and the real estate market are recovering. These two important factors relieve the pressure on consumers and form a good basis for further growth.
Germans increase light vehicle sales to around 1.33 million units
The German manufacturers have kept up with the high-speed growth on the US market. In 2013 they pushed up their sales of light vehicles by 5 percent, to around 1.33 million units. That is growth of around 75 percent compared with 2009, when the German manufacturers sold 763,000 light vehicles. So over this period we have grown much faster than the market itself.
During those crisis years we, the German automotive industry, did not make the mistake of underestimating the importance of the US market. On the contrary, our companies consistently expanded their activities here in the United States. This long-term strategy is paying off.
This development continued in 2013, bringing a new sales record for the German manufacturers on the US market.
That applies to both segments, i.e. the passenger car market and the light truck market, which are almost the same size.
Over the year 2013 as a whole, passenger car sales by German manufacturers expanded by a good 3 percent to reach 951,700 units. This means that one in eight new passenger cars sold in the US bears a German badge. Light truck sales by our manufacturers rose by a whole 9 percent to 376,100 new vehicles.
Successful two-pillar strategy
Our two-pillar strategy – of pursuing exports and local assembly – has once again proved to be successful.
Our manufacturers’ good results on the US market benefit both the still growing assembly sites here in the United States, and Germany as a production location:
- Out of the 1.33 million light vehicles sold by German manufacturers in the US in 2013, 20 percent (260,000 units) were built here in the US.
- If one adds in production in Mexico, then 35 percent (470,000) of the light vehicles sold by our manufacturers comes from NAFTA.
- Another 50 percent (660,000 units) were produced at the plants in Germany.
- The other 15 percent (200,000 units) originates from production sites outside of NAFTA (Mexico and the US) and Germany.
In other words, half of all new cars that are sold by German manufacturers in the US in 2013 are produced in Germany.
US comes top in export value
With a 16 percent share of all German passenger car exports, the United States is the second largest export partner for German automotive manufacturers (after the United Kingdom). Yet in terms of value, exports to the US actually come top for the German manufacturers; the value of their 2013 exports rose by almost 9 percent to 20 billion euro.
And one car in five sold here by our manufacturers comes from a plant in the US.
However, the US is far more than just a sales market for the German manufacturers.
For a long time the United States has been an important strategic production hub; the cars built here go to destinations all over the world:
- In 2013 the German manufacturers produced 625,000 light vehicles in the US.
- Of these, 42 percent (260,000 units) were sold in the US.
- 24 percent of them (150,000 units) went to Europe.
- Another 23 percent (144,000 units) went to Asia.
This means that one quarter of our US production went to customers in Europe, and one quarter to customers in Asia. And four out of ten cars that we produce here are then registered in the United States.
The planned free trade agreement between the US and the EU, which I will say more about in a moment, should provide further stimulus for integrating the markets. The German manufacturers have consistently expanded their assembly here.
Within only a few years, they have more than doubled their light vehicle production in the United States, from 284,700 units in 2010 to 625,000 in 2013.
Further expansion in production
Everything indicates that this trend will continue because our manufacturers are still expanding their capacities here in the US.
This year Daimler is beginning assembly of the new C-Class at its plant in Tuscaloosa, Alabama, the traditional site of SUV production for the M-Class, GL-Class and R-Class.
The BMW plant in Spartanburg, South Carolina, is producing the models X3, X5, X6.
Volkswagen builds the Passat at its factory in Chattanooga, Tennessee.
And from 2016 onwards Audi’s Q5 will roll off the production lines at the new plant in Mexico.
German manufacturers currently employ a workforce of around 31,000 at their plants in the US. This means that one job in six at automotive manufacturers in the US is with a German manufacturer. The number of employees at German supply companies in the US – they have over 200 sites here – amounts to around 70,000. That is one seventh of the total workforce at suppliers in the United States.
US market will continue growing in 2014
We are optimistic about the US market in 2014. We expect that the light vehicle market will increase by 3 percent, getting close to 16 million units. If the current indicators continue as they are, it is certainly possible that the US market will exceed the 16 million mark. The German automotive industry has set itself the target of significant growth on this important market in this year, too.
Very dynamic growth in hybrid and electric vehicles
Another feature of this Detroit Motor Show is the very obvious ramping up in hybrid vehicles. During 2013, sales of passenger cars with gasoline-hybrid propulsion soared by 15 percent to reach around 470,000 units, giving them a 6.2 percent share of the total passenger car market. Last year the German manufacturers quadrupled their US sales of hybrid cars – from nearly 1,900 vehicles to just under 7,600. So we have got off to a very good start. We also see considerable market potential here, because not only the market is growing – so is our portfolio.
Progress can also be seen on the market for electric vehicles (battery-electric vehicles and plug-in hybrids). Sales in 2013 almost doubled, climbing from around 52,500 light vehicles to nearly 96,000. German manufacturers are now also launching their new models onto the market. We expect good opportunities in this segment, too.
Diesel strategy is a long haul
In accordance with our “broad-based strategy”, we are not putting all our eggs in one basket, but instead are actively pursuing all the options. One of them is the clean diesel. Sales of diesel vehicles in the US in 2013 (from Jan. to Oct.) rose by nearly 13 percent, thus growing much faster than the overall market, which speaks in favor of this highly efficient drive train.
We have always pointed out that the “diesel offensive” would be a long haul in the United States. And of course drivers in the US look very closely at the price per gallon, which in the case of diesel is a good 3.90 dollars, unfortunately much higher than that of gasoline (3.50 dollars). But the slight rise in the diesel share of the light vehicle market to 2.8 percent indicates that we are on the right track.
Our market share, which for many years was 100 percent of diesel passenger cars, has fallen to 98 percent – seeing as now competitors have joined us in offering diesel vehicles (Chevrolet Cruze). This might sound strange – but in this case we are pleased about every additional competitor.
US-EU free trade partnership offers huge opportunities
The economic dimensions of the planned Transatlantic Trade and Investment Partnership (TTIP) between the US and the European Union are impressive. The transatlantic population makes up roughly 10 percent of the total global population and generates half of the world’s gross domestic product. The EU and US account for nearly one third (30 percent) of world trade and over 40 percent of global purchasing power. The transatlantic economic relations are the strongest and most extensive in the world by a long way. They are this strong despite the trade barriers still in existence. A transatlantic partnership therefore has enormous potential.
The negotiations are very complex and harbor many challenges. Alongside import duties, primarily the harmonization and mutual recognition of standards and regulations along the lines of “approved once, accepted everywhere” would bring about major cost savings for the automotive sector. One important factor for a successful conclusion will be exploiting the present momentum and driving the work forward so that in 2015 we reach an agreement with concrete results. The partnership will provide a major boost for our industry and its employees.
Please let me summarize:
- In 2013 the German manufacturers achieved a new sales record of 1.33 million light vehicles on the US market.
- This means that within only a few years we have increased our sales by 75 percent, therefore growing much faster than the overall market.
- At the same time, we have more than doubled production at our US sites – to 625,000 units.
- Over 40 percent of them are sold in the US.
- One quarter goes to Europe and one quarter to Asia.
- The US market is strategically important for Germany.
- Half of all cars that we sell in the US are made in Germany.
- For us, the US clearly comes top in terms of export value.
- We have high growth rates for vehicles with alternative drive trains – hybrids and electric vehicles. We are also continuing to pursue our clear diesel strategy.
- The US market remains on course for growth in 2014.
- The German manufacturers and suppliers will keep up with this dynamic development.