Western Europe returns to growth zone – electric mobility gains market foothold
Ladies and Gentlemen,
It is my pleasure to give you a very warm welcome to our half-year press conference and I am delighted that so many of you have accepted our invitation. The balance that I can present to you today is better than we expected at the beginning of this year. Over the entire year 2014, the global passenger car market will increase by around 4 per cent to 75.9 million units. The large markets in the USA and China are continuing their expansion, and Western Europe is returning to the growth zone. It is especially welcome that strong exports are boosting domestic production, which will rise by 4 per cent this year to reach 5.65 million units. This will be accompanied by growth in employment.
USA and China continue to expand
I will now turn to the individual markets. According to our current forecasts the Chinese passenger car market will swell by 15 per cent in 2014 to exceed 18.7 million new vehicles. The rapid development of this market is revealed by a two-year comparison: this year’s volume will be up by a good 5 million cars as compared with 2012. In the first five months of the current year, passenger car sales in China also showed an increase of 15 per cent, to 7.4 million new vehicles. For the US light vehicle market (passenger cars and light trucks) we expect 2014 as a whole to bring a rise of 4 per cent, to 16.1 million vehicles. Up to the end of June this year sales of light vehicles had risen by just over 4 per cent to 8.1 million units.
Western Europe shows first new growth
The Western European passenger car market will grow again this year for the first time after four years of shrinkage – and slightly exceed the 12 million mark. That corresponds to 4 per cent expansion. During the first five months demand for passenger cars in Western Europe increased by almost 6 per cent to 5.2 million new vehicles.
The figures for this year so far (January to May) indicate that the Western European passenger car market is making a good recovery. France and Italy are increasing (up by 3 per cent in each case), while car sales in Spain have in fact risen by over 16 per cent. However, here the scrapping bonus has to be taken into account. Since January demand for passenger cars has shown double-digit expansion in the countries affected by the crisis – Greece (+19 per cent), Portugal (+42 per cent) and Ireland (+24 per cent). The United Kingdom is continuing its keen growth, increasing nearly 12 per cent in the period up to May.
Developments in the new EU Member States were also very welcome. All the markets except Estonia and Slovenia have recorded double-digit year-to-date growth. For the whole of 2014 we expect to see growth of 12 per cent in the new EU countries, up to 872,000 units.
Taking a global view, however, we should not overlook the fact that some regions and countries will record a net decrease in 2014. This will be the case in MERCOSUR (-8 per cent), India (-2 per cent), Turkey (-19 per cent) and Russia (-9 per cent).
However – 2014 will be a year of overall automotive growth.
German passenger car market still holding back
This brings me to the German market. In the first half-year our passenger car market developed as expected. New registrations up to the end of June totalled 1.5 million units, which is a year-on-year rise of a good 2 per cent. Incoming orders from Germany during the first six months were 5 per cent up on the previous year. The growth occurred principally in company cars, where new registrations up to and including May climbed by over 8 per cent. Business with private customers, on the other hand, increased by a slender 1 per cent. Given that total consumer spending has risen (by 1.1 per cent in the first quarter of 2014), we assume the second half-year will also bring more revitalisation in business with private customers.
For the year as a whole, we still expect a volume of around 3 million new passenger car registrations.
Growth in production, exports and employment in Germany
I have already pointed out that as soon as the Western European market recovers, the German vehicle manufacturers will benefit in particular. This is because every second new car registered in Western Europe is from a German group brand. The motor driving our export growth is currently the EU. So far this year (up to May) exports of passenger cars to European Union countries have soared by 16 per cent. Just over half of all cars (53 per cent) that we export from Germany are destined for EU countries. In addition, exports to Asia increased by almost 16 per cent, while those to the USA managed an increase of only 2 per cent.
In total, exports from Germany during the first half of this year have expanded by 7 per cent to 2.2 million units. We have therefore revised our export forecast for the entire year from 2 per cent to 5 per cent, and now expect a volume of 4.4 million units. We have already allowed for growth being somewhat slower in the second half-year because the upturn had already started in the second half of last year.
The healthy level of exports is boosting domestic production, which increased by 6 per cent up to the end of June. As already mentioned, this year’s total domestic assembly will rise by 4 per cent to 5.65 million units. This means we have raised our forecast by 2 percentage points.
The export ratio – that is, the proportion of exports within domestic production – rose to 77 per cent in the first half-year. This is an indication of the strength of our industry. The increase in production has also led to more jobs. In April the German automotive industry had a regular workforce of 766,800, which is 16,200 more than in the same month last year. A strong rise was seen at the vehicle manufacturers, but suppliers and makers of trailers and bodies also recorded slight improvements.
Passenger car production outside Germany will climb by 5 per cent to 9.15 million units over the year as a whole. So far this year it has expanded markedly, primarily at the European and Asian sites. The “two-pillar strategy” pursued by our companies – exports from strong domestic production coupled with increased local assembly abroad – has once again proved to be successful.
If the planned Transatlantic Trade and Investment Partnership (TTIP) between the EU and the USA becomes reality, it will bring huge advantages for companies and their employees, and especially for consumers in general.
However – and I wish to draw particular attention to this – the current healthy situation must not be misunderstood as allowing us to slacken off. We can see risks for Germany as a production and export location looming in several areas. They include dramatic rises in energy costs and additional burdens for those generating their own electricity, along with the decisions on pensions – all of these are factors that do not strengthen German business. In the future we will continue to need flexible labour-market tools for absorbing market fluctuations. Our exports also depend on sustainable growth of the Western European market, and in some key Western European countries – France and Italy, for instance – recovery is actually proving rather tricky to achieve.
Commercial vehicle markets expand strongly
Last week we reported extensively on the commercial vehicle markets at our press workshop in Frankfurt. I will therefore now simply summarise the main points: the economic developments on important commercial vehicle markets give us a boost for the 65th IAA Commercial Vehicles, which will begin in Hannover on 25 September. The Western European market for heavy-duty commercial vehicles expanded by 2 per cent in the period up to May, while the US market enjoyed double-digit growth and China increased by 4 per cent.
In Germany, too, developments have been very welcome this year to date. In the first half-year, a total of 41,200 heavy commercial vehicles (over 6 t) were newly registered, which is 11 per cent more than in the same period last year. However, this double-digit growth cannot be projected onto the entire year, as at the beginning of January the Euro VI standard came into force – with pre-buy effects stretching into the early months of this year. For the year 2014 as a whole we expect heavy commercial vehicles to show a small rise of 1 per cent, to 81,000 units. Sales of light commercial vehicles (up to 6 t) in January to June increased by 7 per cent. For 2014 we expect to see 4 per cent growth to 228,000 new vehicles. So all in all, these are good conditions for a successful IAA Commercial Vehicles. By the way, we have re-designed our IAA website (www.iaa.de), and online accreditation will start on 14 July.
Market for electric mobility picks up speed
No other automotive topic has dominated public debate in recent months quite as much as electric mobility. Indeed we have reached a new milestone: electric mobility is ready for the market. At the moment this new market is small, but it is picking up more and more speed. This is clearly shown by the growth rates in important countries. In the first five months of the current year, sales of electric vehicles in Germany increased by over 90 per cent. We expect this development to continue. In all probability, in 2014 for the first time more than 10,000 electrically powered vehicles (BEVs and PHEVs) will be registered in Germany.
In international pole position
International studies show that the German automotive industry is in pole position among the countries with electric cars. We have now overtaken many of our competitors in the long race for electric mobility: there is no country in the world where customers have a wider choice of new electric models. By the end of the current year, the German manufacturers alone will have launched 16 series models with electric propulsion onto the market. In 2015 another 13 new models will join them. Furthermore, we have not only highly innovative manufacturers, but also a strong supply industry. I will just mention as examples Bosch, Continental and ZF Friedrichshafen. But also the many small and medium-sized firms – often family businesses – give us a considerable competitive advantage. And Germany has another decisive advantage: it is the only country in the world that is home to the complete industrial value-added chain. Whether you’re looking at chemicals or the electrical industry, mechanical engineering or the automotive sector, in all industries some of the world market leaders are in Germany.
We are convinced that electric mobility is here to stay. Electric propulsion has enormous potential especially in regions where the distances travelled are short, and it can make a major contribution to environmental protection and reducing emissions. As with the classical propulsion systems, in electric cars we will also see a process of differentiation. Depending on the application, the appropriate choice might be a battery electric vehicle, a plug-in hybrid or a range extender. Electric cars already pay off for some users today. This is demonstrated in studies by the Fraunhofer Institute. For instance, people who commute to work every day from a suburb into the town centre can save a sizeable proportion of their fuel costs by using an electric car. Also for business users such as couriers and care providers, who make the same journey over and over again, covering a medium annual mileage – an e-car will pay off.
Politicians must create the necessary general conditions
As a new field of technology, there is especially tough international competition in electric mobility. I am sure that Germany has a good chance of taking the lead in electric mobility. The goal of world-wide leadership is already within reach. The German OEMs are among the leading producers of electric models. However, we are lagging behind on the way to making Germany the leading international market. Here the right general conditions have to be created.
It is therefore welcome that the transport minister wishes to promptly introduce an initial electric mobility law which will provide for clear designations of electric vehicles (battery, plug-in, range-extender, etc.) and introduce nationwide special rights for electric vehicles, for instance the use of bus lanes and preferential parking. That is a step in the right direction, and more such steps have to follow quickly. The research and development projects should be continued with the same level of funding they have received to date. Furthermore, the number of charging points has to be increased. Now that e-cars are on the roads, we need easily accessible and user-friendly charging points. We already have a standard connector for “filling up” on electric power.
If Germany is to become not only the leading provider, but also the leading market for electric mobility, the Federal Government will have to send out signals concerning procurement – but fast and decisively. The National Platform for Electric Mobility favours concentrating especially on the market for company cars, because this is where the early growth in sales is to be expected. One incentive for firms to acquire electric cars would be by improving the terms for depreciation. In this way politicians can effectively encourage sales of electric cars. It would not even mean loss of revenue for the finance minister in the medium term. Moreover the national government, the federal states and the municipalities should set a good example by renewing their fleets.
The important thing is to keep value-added in Germany and expand it – especially in the case of electric mobility. Innovations are the key to sustainable forms of mobility for tomorrow – but also to Germany’s competiveness.
Allow me to summarise. You can see from the figures that the German automotive industry is in a good mood. Production, exports and employment are rising, and we are investing 27.5 billion euro world-wide in research and development. By international comparison, the German automotive industry leads in innovation. There are few industries that set the pace – but ours is one of them.
However, it is also clear that there is no guarantee of continued success. The comparison with the football World Cup is a good one. The next round of challenges is approaching, and we cannot rest on our laurels. International competition is getting tougher. The overall economic conditions in Germany and Europe are therefore of crucial importance to our companies.
I consider it to be a matter of urgency for the new European Commission and the newly elected European Parliament to make an unequivocal change of direction particularly in industrial policy, in order to stimulate growth, competiveness and employment in Europe. Right here in the EU we need a better balance between industrial, environmental and social policies. I hope that the EU has learned from past mistakes. The regulations emanating from Brussels should not strangle innovations, but stimulate them.
For this reason, too, I find it especially important that the Federal Government should support one point consistently: despite some questionable noises from London, everything should be undertaken to keep the United Kingdom on board the great “European ship”. The UK is important for Europe’s architecture – and it is important for the economic development of this continent. The United Kingdom supports free trade and clear orientation on the market – and thus forms a healthy counterbalance to state dirigisme and a very widespread internal European redistribution philosophy, which is not uncommon in Southern European countries.
To date the idea of free trade and the market economy has not been as strong in Brussels as we think is necessary. On this point the United Kingdom is an important ally.
Europe also shares values with the United States of America. That is why the Transatlantic Trade and Investment Partnership between the EU and the USA is so important. In view of the increasing significance of the Asian economic area, we have only a brief window of time to put a transatlantic free trade agreement in place setting standards that can then also be applied world-wide at some point in the future. A relapse into protectionism – of which there are many examples around the world – would have severe impacts first and foremost on Germany as an exporting country. And that should be prevented.
|June 2014||January - June 2014|
|Passenger Cars *)||Units||Change
14/13 in %
14/13 in %
|German makes incl. group makes||198.300||-3||1.105.200||2|