NAIAS / Detroit: Forecast: US Market Will Grow 11 Per Cent in 2011 - New Offensive With Hybrids and Clean Diesels
DETROIT and BERLIN, January 10, 2011 -- Statement by Matthias Wissmann, President of the German Association of the Automotive Industry (VDA), at the VDA press conference in Detroit on Monday, January 10, 2011:
The most important automotive trade show in North America is taking place at a good time: the US market is benefiting from a tailwind, and in the year 2010 the light vehicle market expanded by 11 per cent to almost 11.6 million vehicles. Of course we have not yet reached the record levels seen before the crisis. But things are moving forward - last year the citizens of the US sent out a clear signal in favor of the automobile. And we have reason to be optimistic about the year just beginning: we expect the US market too to grow by 11 per cent to 12.8 million light vehicles in 2011.
US market continues on course for growth
The German automotive industry is characterized by the fact that even during the crisis years it did not make the mistake of underestimating the significance of the US market. China and its dynamic growth naturally attracted a great deal of attention, but I am pleased to note here in Detroit that the US market is still the largest vehicle market in the world - and in the light of current forecasts I expect this to remain so in this new year of 2011.
The US market is of equal strategic importance for our companies. Independent of the short-term factors, the long-term growth indicators in the US are positive: the average age of the population is 37, which is much younger than that in Germany (44). In addition, the population growth of 1 per cent in the United States is significantly higher than in Germany (+/- 0 per cent).
I said in Detroit at the beginning of 2009 - and one year ago I repeated this - we are convinced that in the long term the US market will resume a path of expansion. Today I can see that my assessment has been fully confirmed. And there's more: the motor driving growth is already running at speed. If we compare the years 2011 and 2009, we find that over this period the US market will increase by 23 per cent, or 2.4 million light vehicles.
We should just as clearly point out the risks. The crisis in real estate has not yet been brought to an end, and at 9.8 per cent the rate of unemployment is still relatively high. The Consumer Confidence Index is indeed showing positive development, but it is still climbing very slowly.
However, in 2011 private consumption may be expected to grow by 2.5 per cent. In 2010 - after two years of contraction - it already rose by 1.7 per cent. In 2011 investments will increase by 9 per cent. This year the USA's gross domestic product will therefore rise by 2.6 percentage points. And that is more than in most of the EU Member States in 2011.
The year 2010 has shown that the US remains an automotive country. In the future its citizens will continue to want and use individual mobility. They need automobiles and do not want to do without them. In view of the renewed price rises at the pumps for gasoline and diesel fuel, motorists are scrutinizing their fuel consumption more and more closely. In this area in particular the German vehicle-makers offer tailor-made models whose fuel efficiency is better than that of any of their competitors. Furthermore, they rate the best when it comes to safety, quality, comfort and vehicle dynamics.
German manufacturers increase their market share for the sixth year in succession
We are delighted that we are able to continue our success story. For six years now, our manufacturers have continually pushed up their share of the light vehicle market, from 5.1 per cent in 2005 to the current level of 7.6 per cent. Last year alone they increased the figure by 0.3 percentage points and sold 880,700 vehicles on the US market - a rise of over 15 per cent. What is remarkable is that our growth in market share has again come both in the car segment and in light trucks. This means that in 2010 the German manufacturers once again did better than their competitors.
New record for passenger car market share - dominant in the luxury segment
In the car segment in 2010, the German OEMs increased their sales by 12 per cent to over 667,800 units. This means that they expanded three times as rapidly as the overall car segment, which grew by a good 4 per cent to 5.6 million vehicles. In the car segment in 2010, the German OEMs increased their market share to 12 per cent, a new all time high (cf. 11 per cent in 2009).
Last year in the luxury segment, the German brands built on their dominant position, pushing up their market share to 47.1 per cent (cf. 45.5 per cent in 2009). "Luxury Cars" - the official name given in Ward's - is not directly comparable with the segmentation in Germany, as it also includes models such as the BMW 1, 3 and 5 Series, Audi's A3, A4 and A6, and the C and E-Classes from Mercedes-Benz. This means that almost half of all luxury cars sold in the US in 2010 bear a German badge. At around 400,000 units, six out of ten passenger cars sold by the German OEMs in the US belong to this segment. And the German brands are also present in the medium segment (VW Passat, VW CC).
Campaign in the small car segment, too
The German brands are well positioned in the small car segment, which now makes up more than one third of the total car sector (36 per cent). Their market share in this segment rose last year by one whole percentage point to 10.7 per cent. In total nearly 220,000 small cars built by German manufacturers were sold in the US - an increase of 10 per cent as compared with the previous year. So one in three German passenger cars sold in the US in 2010 was in the small car segment.
US sales of environmentally friendly clean diesel passenger cars rose by one third
In the case of diesel passenger cars, the German manufacturers maintain a dominant position, with 100 per cent market coverage. However, it is even more important that US sales of German clean diesel cars climbed by one third to 55,650 last year (cf. 42,000 in 2009). The German brands are continually extending the range of diesel passenger cars they have on offer. They not only have a strong hold on the luxury segment, but are also taking an increasing share of the compact and medium classes. This "model offensive" will continue to exert its effects in the current year.
Sales of light trucks up by 28 per cent - numerous hybrid models
In 2010 we increased our sales of light trucks to around 212,900 units, which equals year-on-year growth of 28 per cent, and thus pushed up our market share in the US by 0.3 percentage points to 3.6 per cent. The light truck market as a whole expanded by a good 18 per cent to 5.9 million units. So we have grown faster than our competitors from the US and Asia.
One explanation for this is that the German makers of light trucks have a large number of models on offer, principally in the segment that has doubled its share of total registrations over the last five years to around 25 per cent (cf. 24.5% in 2010; 13% in 2005): the Crossover Utility Vehicles (CUV). The Germans are scoring here with their attractive and fuel-efficient models that are being offered increasingly as hybrids, such as the BMW ActiveHybrid X6, the ML 450 Hybrid from Mercedes-Benz, the Porsche Cayenne S Hybrid and Volkswagen's Touareg V6 TSI Hybrid. Alongside the pick-up segment, it is the growth in CUVs which has ensured that in the year just ended light trucks expanded their share of all light vehicle sales to 51.2 per cent (cf. 47.5 per cent in 2010).
Market share of light diesel trucks has more than tripled in two years
In light diesel trucks also, the German brands are moving into the passing lane and offering more and more models that are going down very well on the market. Their share of the overall light diesel truck market has more than trebled within the short space of two years, and now amounts to 10 per cent. (cf. 7.3 per cent in 2009; 3.1 per cent in 2008). This rise is partly the result of factors such as the clean diesel models Audi Q7, the BMW X5, the VW Touareg and the GL, ML and R-Classes from Mercedes-Benz.
On the light diesel vehicle market as a whole (265,000 units) - that is, cars and light trucks taken together - the German OEMs have thus quadrupled their market share within only two years - from 7 to 29 per cent, reaching the level of 76,650 vehicles. Compared with 2009, our share of the light diesel vehicle market has gone up by 4 percentage points.
The German manufacturers have clean diesel models on the market, which meet the most demanding exhaust standards (BIN 5) in all 50 federal states. Last year the proportion of diesels among total sales of light vehicles rose slightly to 2.2 per cent (cf. 2.0 per cent in 2009). We assume that clean diesels will continue to enjoy considerable opportunities for growth on the US market. And the year 2010 has certainly shown one thing: the German vehicle-makers will have an exceptionally large share in this growth.
The German manufacturers are, however, not putting all their eggs in one basket, but are instead pursuing their "broad-based strategy" for powertrains both on the US market and in Europe: that is, they are continuing to optimize the classical powertrains and at the same time developing alternative systems. In addition to the clean diesel and direct injection gasoline engines, here in the US that means above all new models with hybrid drive, which are already doing well on the market.
Successful two-pillar strategy for production: exports and assembly rose in the US
Last year the German auto-makers slightly increased their share of light vehicles built at North American production sites (i.e. within NAFTA) and sold in the US, to 29 per cent of their US sales (251,300 vehicles). Another 629,400 units, or 71 per cent, are assembled in European plants.
The two-pillar strategy for production, which our manufacturers are following on the US market, is paying off: US sales of vehicles built within NAFTA have risen by 18 per cent, and sales of vehicles imported from Europe to the US by 14 per cent. Step by step, the German automotive industry is escaping the effects of currency fluctuations. At the same time this development underscores the huge importance of North America, both in the global production network and as an export hub.
In NAFTA the German OEMs increased their assembly volume by 35 per cent to 722,000 light vehicles (435,000 units in Mexico; 287,000 in the US). The majority of them were exported; over a third were sold in the US. We expect that the proportion of vehicles assembled in the US will continue to increase in 2011, especially as production commences at the VW factory in Chattanooga, Tennessee. And the other German manufacturers are also expanding their presence on the US market. Last year the NAFTA region accounted for 12 per cent of all foreign production by German brands.
Just how strongly the recovering US market affects Germany as a production location is shown by the export figures. In the year 2010, German manufacturers increased exports of passenger cars produced in Germany to the US by 44 per cent to 516,000 units. Another 113,400 vehicles from other European assembly sites were likewise exported to the US.
The US is therefore once again the second most important export destination for the German automotive industry (after the United Kingdom but still ahead of China). The proportion of all exports of German-branded passenger cars going to the US amounts to 12 per cent. In terms of value, the US actually comes top of the export rankings for the German OEMs (at around 13 billion euro).
One sixth of all employees work for German manufacturers
The German manufacturers employ about 25,000 people at their US plants. Compared with the previous year, that represents a small rise in the total workforce, of around 1,000. This means that one sixth of all employees of automotive manufacturers in the US work for a German brand. So there are 43,000 employees at German OEMs within NAFTA - that is, including Canada and Mexico. The number of employees at German supply companies in the US has gone up by 2,000 to 52,000 - which is one eighth of all employees working at suppliers in the United States.
Summary and outlook
We expect that 2011 will be a good automotive year for the German manufacturers - and this also applies to the US. The conditions for further growth are in place: we are enlarging our production capacities in the US and aiming to increase our market share again this year. If we look at the volume of the US light vehicle market in 2011 of 12.8 million units in relation to our market share, we can achieve sales this year reaching the one-million mark, given the right background conditions.