Mattes: German manufacturers present many innovations in Geneva

02.03.2019

“The German vehicle makers have brought numerous world premieres to Geneva. Most of all the Geneva Motor Show stands for traditional displays, sporty and stylish models, and a touch of luxury. The progress our manufacturers will demonstrate is remarkable – particularly in electric mobility, but also in digitization – on ‘neutral territory’ on the shores of Lake Geneva. This will include new battery-electric models, plug-in hybrids and concept cars. In the future the most advanced connectivity will provide drivers with a large number of serviceoriented ‘assistants’ to support them in all sorts of ways. The German OEMs have brought many innovations to Geneva,” stressed Bernhard Mattes, President of the German Association of the Automotive Industry (VDA), as the motor show prepared to open its doors.

Mattes also described the economic and trade context in which the sector is operating. “In 2019 we are facing several questions relating to trade and economic policies. They include Brexit and the trade conflicts between the US and China, and between the US and the EU. Assuming that these issues will be resolved constructively, we expect that in 2019 the global passenger car market will more or less equal last year’s level (+1 percent to 84.9 million units). Our current forecast is that the European market will remain stable, on 15.6 million passenger cars. The US market may well contract slightly in 2019 (-2 percent), but will still be at a high level, with 16.9 million light vehicles. If the current talks between the US and China bring the two sides closer together, this year the Chinese passenger car market could match last year’s result of just over 23 million,” Mattes stated.

“In 2018 the German manufacturers took 7.8 percent of the US market in conditions that were not easy, and almost matched their result from last year. On the Chinese market we actually bucked the trend and significantly expanded our market share to 21.8 percent (20.1 percent in 2017). Passenger car sales in China by German group brands rose by 5 percent to 5.1 million new vehicles. In Europe (EU + EFTA) we recorded a market share of 48.2 percent in 2018. Around half of all new cars sold in Europe bear a German group badge”, stressed Mattes.

Our domestic workforce increased by 14,400 in 2018 to 834,400 workers directly employed in the industry (average over the year). Mattes commented, “That is the highest level of employment since reunification.” In the current year the VDA president expects automotive employment in Germany to remain stable.

“This year again, foreign production will grow more strongly than overall passenger car production by our group brands,” according to Mattes. While global passenger car production by German OEMs will, in all probability, remain stable in 2019 (approx. 16.4 million units), production abroad will climb by 3 percent to reach 11.6 million. “We expect domestic production to make a lateral shift and total around 5 million new vehicles”, he explained.

Regarding the trade talks between the US and the EU, Mattes said, “Now everything must be done to reach a constructive solution at the negotiating table. The 90 day period should be used. The discussions and negotiations must be made a top priority. We must not lose any time.” The VDA president pointed out that taken together, the EU and the US accounted for roughly half of world trade. “Furthermore, the United States cannot have any interest in us falling prey to protectionist tendencies directed against one another.” He emphasized: “We are the largest exporter of vehicles from the US. More than half of the 750,000 cars that we build in the US are destined for export. At this time around 118,000 people work at the US plants of our manufacturers and suppliers, which is 8,000 more than one year ago.”

On the subject of Brexit, Mattes stressed, “All those involved should try to avoid a hard Brexit, because that would be the worst case scenario. A no-deal Brexit would have serious consequences and harbor considerable risks for companies and employees in the EU-27, which would have a direct effect on the automotive supply chains – with massive adverse impacts in logistics coupled with high import tariffs. In terms of absolute numbers, the United Kingdom is Germany’s largest partner for exported passenger cars. In 2018 the effects were already being felt. Exports from Germany to the UK slumped by 13 percent to 666,000 3 new vehicles. We hope that a solution can be found so that Britain will not leave with no deal.”

Matte added that the German automotive industry was going on the offensive concerning the transformation of the sector, saying, “We will invest over 40 billion euros in electric mobility during the next three years, and another 18 billion euros will be invested in digitization and connected and automated driving.” In that time the range of electric models from German OEMs would treble to around 100, he explained, and continued: “The ramp-up of electric mobility is coming in Europe. Without it, the EU’s CO2 targets cannot be achieved by 2030. However, this also demands the appropriate regulatory conditions – right across Europe. A look at the differences in per capita GDP in the EU clearly shows that Germany, together with a few other large countries, must have a much higher proportion of electric vehicles among its new registrations than the EU average. The charging infrastructure must therefore be resolutely expanded, combined with incentives for the buyers of e-cars.”

The German vehicle makers and suppliers demonstrate the same verve when it comes to digitization: “OEMs are mutating into manufacturers and mobility service providers. This shift comes with considerable investment, especially in IT and software. As these technologies develop very rapidly, new multi-sector cooperative projects are worthwhile and necessary,” Mattes underscored. However, he added, the industry also depended on an internationally competitive digital infrastructure. “For this we need total coverage with a dynamic 5G network on all traffic routes,” he said.