German Manufacturers Increase US Sales to Around 1.4 Million Light Vehicles

Statement delivered by Matthias Wissmann, President of the German Association of the Automotive Industry (VDA), at the VDA's press conference in Detroit (USA)

Ladies and Gentlemen,

it is my pleasure to welcome you most warmly to our VDA press conference here at the Detroit Motor Show. The economic situation is healthy as this auto show – the most important one for the US – takes place. Estimates put growth of the gross domestic product at 2.4 percent again in 2015, and a 2.6 percent rise is expected during 2016. Employment is at a high level, and the price of oil is now 40 percent lower than it was one year ago. Consumer confidence is also riding high.

All of this is reflected in the automotive market: the US market expanded by 6 percent in 2015, reaching 17.4 million new light vehicles (passenger cars and light trucks) according to WardsAuto. That is a new record level, even beating the previous top figure from 2000.

One trend is still continuing that was already visible in the preceding years: the light truck segment shows double-digit growth and is driving the market. In 2015 a total of nearly 9.9 million light trucks were sold, which was 13 percent more than in the year before. The passenger car segment, on the other hand, contracted by 2 percent to 7.5 million units. In 2015 the proportion of light trucks on the overall US market rose to 57 percent, while passenger cars accounted for only 43 percent. Accordingly the middle CUV segment, with 3.2 million units, is now the segment with the highest sales and last year it squeezed the mid-size cars out of first place.

In view of the low price of gasoline, this development should also continue this year. According to our forecasts the total US market (for light vehicles) will increase slightly in 2016 – to 17.5 million vehicles (+1 percent).

This brings me to the German manufacturers. They pushed up their sales on the US market by 2 percent in 2015 to about 1.4 million new vehicles. That is a new record level. We in the German automotive industry therefore have good reason for coming to Detroit in a confident mood.

However, there certainly are some challenges. The passenger car segment, where the German brands are strong, is losing importance. But we still managed to maintain our market share (12.3 percent). In the light truck segment, which is growing strongly, the German manufacturers increased their market share and with a 14 percent rise in sales they expanded faster than the market as a whole. Overall, therefore, the German manufacturers more or less maintained a stable position on the US market (light vehicles) in 2015. Their market share amounts to 8.0 percent (8.3 percent in 2014).

Of course we have also come to Detroit with the intention of making a clear statement about diesels. This topic has generated uncertainty in the public, the authorities, consumers and customers. The diesel strategy that the German automotive industry has been pursuing for many years, in particular on the important US market, has suffered considerably as a result of the events at one major company.

I am sure that Volkswagen will do the utmost to regain lost customer confidence in North America. All of our companies will work hard to convince consumers of diesel’s advantages for fuel efficiency and CO2 reduction. Even the ICCT test has shown that we do not talk about a general diesel problem but a specific manipulation of software.

Regaining consumer confidence is not going to happen overnight – it will take time. But now after the Paris Climate Conference it is important also to the US. In Paris the United States – along with a large number of other countries – committed to the target of reducing CO2 output to make a major contribution to global action on climate. All the experts agree that modern diesels can be helpful in this.

In the US we take 95 percent of the market for diesel passenger cars, and we therefore clearly remain in a dominant position in vehicles with this drive train.

I also wish to emphasize that despite the resistance we are naturally experiencing here in the US, the German automotive industry will stand by its diesel strategy. We stand firmly by diesel vehicles because we are convinced that they not only have advantages that can be applied when it comes to consumption and therefore CO2 emissions, but also that they – with the most advanced exhaust technology – comply with the most stringent pollutant limit values. And they do so completely legally without any tricks.

It is clear that the Diesel is not the end of the automotive alphabet. Electric mobility is an important part of the automotive future.

We are especially pleased to see the market success of the German OEMs in the US with their electric cars. Within just one year, their attractive new models have more than doubled their market share, taking it from 9 to over 20 percent. In 2015 the German OEMs sold more than 23,000 new e-cars here in the United States, which was a rise of over 100 percent. This is all the more remarkable because last year the US market for electric cars went into reverse after years of keen growth and contracted by 5 percent. One fifth of all new electric cars sold in the US in 2015 bore a German badge. The US market is the most important and the largest one in the world for the German producers of electric cars. We sell far more e-cars here than we do in Germany. Today 40 percent of all the electric models on offer in the United States already come from German manufacturers.

In 2016 and the following years, the German automotive industry will continue to massively step up its campaign for e-mobility in the US and around the world. We see ourselves as a lead nation in the strategic objective of using e-mobility to further reduce CO2 emissions from road traffic.

Obviously, it would be wrong to reduce the presence of the German automotive industry here in the US simply to diesels. In fact the opposite is the case. 90 percent of all passenger cars the German manufacturers sell on this market run on gasoline, and some manufacturers have an even higher proportion.

The German auto makers are particularly strong in premium passenger cars and premium CUVs – their market share exceeds 40 percent in both of these segments. The “model offensive” by our premium brands comes over impressively at this auto show.

I would like to mention just a few premieres: Audi’s A4 Allroad quattro, the BMW M2 and BMW X4 M40i, Mercedes-Benz’ E-Class and SLC, and Porsche’s 911 Turbo and Turbo S.

Of course, premium stands for the best quality, design, safety, comfort, dynamics and efficiency. But premium brands also live in particular from the associated emotions. Starting with the purchase and then during every journey, the customers experience an additional emotional benefit enhancing their ties to the premium brand.

The Germans’ market success is also partly due to the fact that they made their production international at an early stage:

43 percent of all light vehicles sold in the US by German producers in 2015 were built in Germany. The US is the second most significant destination for our companies’ exports (after the UK). In terms of value, however, the US heads the rankings for German manufacturers’ exports. In 2015 the value of their exports rose to over 24 billion euros, thus setting a new record

Almost one quarter (23 percent) came from plants in the United States – and the figure is rising

Another 16 percent comes from Mexico

At 39 percent, well over one third of the vehicles we sell in the US are produced in NAFTA

The US is becoming more important to the German OEMs all the time, not only as a market but also as a production location. In 2015 they pushed up their production at US sites by 13 percent to 810.000 units. A good 40 percent of US production was sold in the United States, and nearly one quarter was exported both to Asia and to Europe. Exports to Asia and Europe both showed double-digit growth last year. I find it remarkable that the German manufacturers have thus increased both their exports from the US and the value of their exports from Germany to the US. The result is quite clearly a win-win situation for the national economies of both countries.

At present, the German vehicle manufacturers employ 35,000 people at their US facilities, which is around 2,500 more than they had one year ago. This means that one sixth of all jobs at automotive manufacturers in the US is at a German company. The German suppliers make an even greater contribution to employment – they have a workforce of 77,000, which is 5,000 more than one year ago. This figure does not yet take ZF’s acquisition of TRW into account. The growth is explained by the fact that the German makers of parts supply not only German auto manufacturers, but also other OEMs that produce cars in the US.

The German automotive industry is also defining key focal points when it comes to the second great driver of innovation – connected and automated driving. The Frankfurt Motor Show pointed the way in September with its “New Mobility World”: construction of the highway for digital mobility is progressing at speed. To put it simply: smartphones and cars are being integrated. This process requires a partnership between automotive manufacturers and the IT sector. We are also aiming to be in the driver’s seat concerning this “mobility of tomorrow.” In the coming three to four years alone, German manufacturers and suppliers will invest 16 to 18 billion euro in the research and development of connected and automated driving. Digitization will bring huge benefits: driving a car will become even safer, more comfortable and more efficient.

The rapid pace of innovation and the numerous new models that the German OEMs are launching onto the market in the US lead us to expect stable sales here in the US in 2016, that is, once again a figure of around 1.4 million light vehicles – although it is not yet possible to see the full consequences of the events surrounding diesel cars. In the medium term I expect to see continued growth by the German brands on the US market. The number of models that we build in NAFTA will also increase.

Here in Detroit I am appealing for an active final spurt as we enter 2016, so that the Transatlantic Trade and Investment Partnership (TTIP) can be brought to a successful conclusion. The free trade agreement would bring huge benefits for the citizens and companies in the US and Europe. An agreement of this type is of strategic importance especially for the German automotive industry.

And that is not only because we have an export quota of 77 percent, but because we produce on both sides of the Atlantic – and we also supply goods across the Atlantic in both directions. Just the import duties in the US and the EU add up to around 1 billion euro for the German automotive industry every year. Then there are also non-tariff trade barriers causing much higher costs. If these obstacles are abolished there will be room for additional growth and greater prosperity.

And all of us should know that a transatlantic free trade partnership should never be seen in isolation – the Pacific region offers our friends in the US a very attractive alternative. For this reason, too, I am using the opportunity to point out that TTIP is necessary for the German automotive industry.