Matthias Wissmann: Germany – Country of cars

There are two areas where Germany’s reputation is very distinct throughout the world: football and cars. Here in Ger­­many is where the car was invented 125 years ago and where it is still being rein­­vented every day. No other industry is characterised by such a high innovation speed and global orientation. The illustrious names of German car makes – as well as their suppliers – are known round the world, and their attractive models are equally admired and desired throughout Europe, North America, South America and Asia’s emerging countries.

A few figures convey the importance of this key sector: in 2010, the German motor industry produced 11.6 million pas­senger cars worldwide, of which 5.5 million at domestic sites. Three out of four cars made in Germany are exported. Inter­na­tional demand for German cars is lively. During the first six months of 2011, new orders from abroad rose by around 13 per cent, exports by six per cent to 2.3 million units.

German car makers were quick to take the opportunities of internationalisation and, thus, have healthy structures. Roughly one third of passenger car exports go to the Euro zone, and another 31 per cent to Europe. USA represents 15 per cent of exports while eleven per cent go to China. The “rest of the world” accounts for eleven per cent.

A look at the market shares emphasises the assertion that the success of the
Ger­­man car industry lies in its innovation power – as well as in its clear orien­­ta­tion towards international markets. In the domestic market, our share is 70 per cent. In western Europe, nearly every other new car purchase is a German make. In China, it is every fifth new car.

 

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In USA, we have been raising our market share for seven years in a row now. There, German makers have struck the right strategic decision in concentrating the production in local plants mainly on so-­called crossover utility vehicles. With their low-CO2 engines, those vehicles match the demand: rising fuel prices cause even US customers to make more economical choices. German makers are expected to expand the production of passenger cars at their US manufacturing sites as well. The new Volkswagen plant in Chattanooga is an important step in that direction. Daimler and BMW also intend to raise their capacities. Furthermore, the sustainable diesel strategy is paying off: an increasing number of US motorists are convinced of the efficiency of the low-emission clean diesel, to the extent that new diesel car registrations are rising faster than the market. The fact that our market share of newly registered clean diesel passenger cars in USA is 100 per cent is evidence of the strong position of German diesel car makers.

The international market achievements further have a positive influence on domestic employment. According to data from the Federal Statistical Office, the core work­­force in the German car industry rose by 13,000 to over 718,000 in 2011. In addition, the number of temporary workers is constantly on the rise. Thus, the German car industry – makers and suppliers – safe­­guards and improves employment at the location of Germany.

In 2010, the German car industry increased its turnover by one fifth to 317 billion euros, and the trend is upward. Moreover, the capacities of our makers are well utilised and were well over 90 per cent in 2011.

However, a good car year also requires lasting price stability at the fuel pump. While new car prices remained stable, fuel prices at the pump rose by eleven per cent in January 2011, and that after motorists already had to cope with double-digit price increase rates in 2010.

 

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The dynamic run-up that we are experiencing partly derives from the fact that during the global economic crisis of 2008 and 2009, we did not cut, but instead stabilised research and development invest­­ments, despite significant drops in the turnover. The German motor industry in­­vests approximately 20 billion euros per year in R&D – more than any other sector.

The progress that we are reaching in CO2 reductions is a good indicator for the speed of innovation. For, fewer grammes of CO2 per driven kilometre means lower fuel con­­sumption – and, thus, more efficient cars. The average CO2 value of newly registered passenger cars of German make in Germany currently barely reaches 145 grammes per kilometre (g/km). Com­­pared with the previous year’s value, that represents a drop of more than four per cent. From the minicar to the mid-range car to the family van, the CO2 values of German makers are usually lower than those of importers. In several vehicle segments, we are even the CO2 champion, producing the model with the lowest CO2 value.

The reduction of CO2 emissions is essential to the core business of the makers. However, the consumption reduction is not limited to single models or segments, but rather applies to the full range of vehicles of every maker. It is, thus, not surprising that the number of low-emission passenger cars of German make has been in­­­­­­­­­creasing significantly year after year. In the meantime, customers have a choice of more than 300 models of German make with CO2 values of 130 g/km or less. This is equivalent to a fuel consumption of less than five litres per 100 kilometres. The number of such vehicles has increased sevenfold since 2007. The fastest advancements in that field can larg­ely be attributed to German automotive suppliers: they deliver many of the related technological innovations.

However, the reduction of carbon dioxide emissions is not our only goal. At the same time, we aspire to maintain and extend the high standards of safety, comfort and design of our vehicles. For, only then is the offer truly attractive to the customer. A great number of modern assistance systems – brake assistant, lane guard system and adaptive front lighting, to name just a few – increase driving safety and noticeably relieve the driver. Meanwhile, the driver remains the “boss” – the “assistants” merely provide support, leaving the responsibility with the driver.

 

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Besides optimising the classic petrol and diesel engines, our companies are investing large sums in the development of alternative drive systems. In the coming three to four years alone, ten to twelve billion euros will be spent on that. A significant portion thereof goes into the development of electric mobility. Battery technology is being further advanced so that we can reach our ambitious objectives in the areas of operating range, charge time, durability and weight. The German car industry is dedicated to being a lead supplier of alternative drive systems as well; for, Germany – according to the federal government – is to become a leading market for electric mobility: in 2020, there were about one million electric vehicles on our roads. The target is not limited to electric cars, which are driven solely by battery power, but also includes plug-in hybrids and so-called range extenders, which combine the advantages of electric drives and conventional combustion engines.

There is no doubt about it: these are exciting times for the automotive industry. For, even classic drive systems still hold a 25-per-cent potential for efficiency improve­ment and thus, fuel consumption reduction, by the end of the decade. Which drive system will eventually come out on top or which “mix” of drive systems will be prevalent on our roads in 2020 cannot yet be predicted. However, one thing is clear: even in 2020 or 2030, people will still set great value upon personal cars. For, the desire for individual mobility, which is not dependent on rigid schedules, is a global one, crossing all cultures. That is obvious in China, India, eastern Europe, Russia and many other markets. The future prospects of the German car industry – and thus, also of the automotive location of Germany – are very promising in all regards. We shall seize them.

 

wissmann_grey-KopieThe author studied law, economics and political science in Tübingen and Bonn. In 1993, he was Federal Minister for Re­­search and Technology; from 1993 to 1998, he was Federal Minister of Trans­­port. From 1976 to 2007, he was a member of the German parliament. Mr. Wissmann has been president of the German Asso­­ciation of the Automotive Industry and vice-president of the Confederation of German Industries since 2007.