Statement delivered by Matthias Wissmann, President of the German Association of the Automotive Industry (VDA), at the VDA’s end-of-year press conference in Berlin on December 1, 2015, at 12.30 h
Ladies and Gentlemen,
I have pleasure in welcoming you most warmly to our annual press conference. Today I wish to give you an initial review of the automotive year 2015 and present the outlook for the coming year. And of course I will also talk about the automotive topic that has been at the center of attention for several months – the manipulation of software in diesel cars. To add to this, a few weeks ago during the examinations by Volkswagen some values came to light for CO2 and consumption, which were too low, for the certification of some vehicle models. That, too, will now be checked thoroughly.
But first of all to the market. What were the defining features of the automotive year 2015? The three major automotive markets – Western Europe, the US and China – are growing again this year. They ensure that the global passenger car market will show a rise for 2015 – of 1 percent to 76.9 million units.
- The US market exceeds the 17 million mark and will grow by 5 percent to 17.2 million light vehicles.
That is the highest value since 2000; it demonstrates the vitality of the North American market.
- China has been through ups and downs this year.
The especially high growth rates of recent years are probably now behind us, but the world’s largest passenger car market remains on its path of growth, even if this is at a lower speed. We expect 2015 to show a rise of 4 percent to over 19 million passenger cars.
- The real surprise is Western Europe:
In 2015 this market will expand by a whole 7 percent to almost 13 million passenger cars. Twelve months ago nobody expected that. This market is advancing on a broad front in 2015.
The five largest automotive countries in Western Europe all show growth: Germany is expanding by 4 percent, and France by 5 percent. The United Kingdom’s increase of 6 percent puts it on a new record level. Italy and Spain both record double-digit growth. The smaller Western European markets are also continuing their recovery, for instance Portugal (+26 percent) and Ireland (+25 percent).
Yet there are other countries that are putting the brakes on the global automotive business, in particular Russia (-35 percent) and Brazil (-20 percent). In Japan, too, a reduction of 9 percent is to be expected.
Now to the situation at home. In November new registrations of passenger cars rose by 9 percent to exceed 272,000 units. In the first eleven months of this year, the market recorded a volume of 2.96 million new cars (+5 percent). We expect the year 2015 as a whole to total 3.17 million new registrations (+4 percent). This will continue the slight growth seen last year. Domestic incoming orders for the German group brands climbed by 6 percent in the first eleven months.
Domestic passenger car production increased by 3 percent in the year to November, reaching 5.4 million units. For the year as a whole we expect a production volume of 5.7 million (+2 percent), which is the third growth figure in succession. Foreign production will rise slightly over 2015 to 9.45 million passenger cars (+1 percent). Total world passenger car production by the German group brands now exceeds the 15 million mark for the first time.
In exports we also expect an increase of 2 percent to 4.4 million new cars over the year 2015 as a whole. By the end of November a good 4.1 million units were exported (+3 percent). The export quota comes to 77 percent. This means that more than three out of every four cars produced in Germany are destined for other countries. The export demand is generated mostly by Western Europe and the US.
The employment situation in our industry here at home is also developing well: at present we have a regular workforce of 800,800 employees, which is about 17,000 more than we had one year ago. The growth can be seen in all three manufacturer groups – the vehicle producers, the suppliers and the trailer industry. For example, the number of employees at the suppliers has expanded by 5,100 to 303,300.
Turnover in the German automotive industry climbed by around 11 percent in the period up to September, reaching 300 billion euro. Here, too, increases occurred in all three manufacturer groups.
However, we can certainly see some aspects on the horizon, which could cloud the radiant picture. The EU’s expansive monetary policy and the low price of oil are masking some structural weakness. Furthermore, the draft bill introduced by Federal Minister of Labour Nahles to regulate service contracts and temporary work harbors risks for Germany as a business location and the jobs here. In the automotive industry this would affect the development service providers in particular. But our companies need the flexibility that enables them to react to market fluctuations. And given the fact that more and more cars are being built at international sites, policy-makers themselves must have an interest in keeping Germany competitive as a production location.
A brief look at commercial vehicles: The development of the Western European commercial vehicle market (over 6 t) is very positive, and this year it will grow by 10 percent to over 251,000 units. The growth is based principally on the dynamism of Southern Europe and the United Kingdom. The German market volume records a modest increase of 2 percent to 81,200 units. The efficiency of modern commercial vehicles is impressive. Just recently a practical test showed that today diesel consumption can already be reduced by up to 14 percent using a fully optimized truck.
Viewed overall, the automotive year 2015 has – despite a deal of turbulence – demonstrated a stable upward trend. We have pushed up sales, turnover, production, exports and employment. Never before have the German automotive manufacturers built so many cars around the world as in this year. Yet for us that is not a reason to start cheering.
We are looking to the future because we know that the going will get tougher and the challenges will increase in the coming year. There are many unpredictable aspects in the world economic situation – the political tensions in the Middle East are growing, and the fight against terror makes particular demands on the industrialized countries. Therefore all forecasts for the coming year are made on the assumption that the general conditions will not become worse. In that case we expect the global passenger car market in 2016 to expand by 2 percent to 78.1 million units. And the three major vehicle markets – Western Europe, the US and China – will continue to grow next year, too. But the path will be rockier than before.
- The US market will in all probability increase by 1 percent in 2016 to 17.4 million light vehicles.
- In China we expect a rise of 2 percent to 19.5 million passenger cars.
- And in Western Europe we expect 2016 to bring expansion of 1 percent to nearly 13.1 million units.
Why is the growth in Western Europe so slender? Now, the United Kingdom has just gone through three years of expansion so there is hardly any more room for growth there. Recovery in Italy and France will continue at a lower speed. In Spain we expect more of a lateral movement. Next year Russia should be able to maintain the already very low level from 2015. In Brazil, in all probability, the shrinkage will at least go back to single figures (-5 percent). Of course the forecasts for Russia and Brazil also colored with a little hope.
The Western European commercial vehicle market (over 6 t) may be expected to increase by 5 percent next year to 262,400 units, while for Germany we expect growth of 1 percent to 82,000 vehicles. This would be a good backdrop for the success of the 66th IAA Commercial Vehicles that will take place in Hannover in September.
This brings me to the German passenger car market: If the general conditions do not get worse, in 2016 the German passenger car market will grow slightly to around 3.2 million new registrations. We expect exports to increase by 1 percent to almost 4.5 million passenger cars. Domestic production can also be expected to expand by 1 percent to a total of around 5.8 million units. We expect stable developments in turnover and employment. Foreign production will probably reach a volume of 9.7 million passenger cars (+3 percent).
I specifically wish to talk about diesels. There is no question: this abuse has cost trust – in the company involved, in the entire industry and in diesel technology. We take that very seriously. The events are contrary to the way the automotive industry sees itself. The abuse of software to manipulate exhaust values is unacceptable. Volkswagen has agreed to tackle this crisis of trust with maximum transparency, and swift and comprehensive investigation. This involves intensive work, and initial results already exist. That is right and necessary. And naturally it is equally important that the CO2 and consumption figures are determined correctly on the test bench for certification.
However, we resist any attempt to create a general suspicion surrounding the automotive industry and diesel vehicles. Diesels are not on the way out. On the contrary, they are necessary for achieving the CO2 targets, because they consume 20 percent less fuel than gasoline models – and their CO2 emissions are 10 percent lower on average. There is no doubt that the NEDC testing cycle used up to now is getting to be out of date. We are therefore also in favor of the new WLTP testing cycle that will be close to real-life conditions. But it is also clear that – because of the physics involved – in the future there will still be differences between a “laboratory CO2 value” and the value on the road. “In real life” fuel consumption, and with it CO2 emissions, depend on many factors. And it is just as clear that the exhaust emissions, especially the nitrogen oxide emissions, cannot be the same in normal road traffic as those achieved on the test bench. The driving behavior and driving profile are simply too different. And to add to this there are the measuring tolerances.
So it is all the more important that the EU has now passed the additional “Real Driving Emissions” (RDE) test procedure for measuring exhaust emissions on the road from 2017 onward, in addition to procedures in the laboratory. We welcome RDE, but here too we need the right framework conditions. The requirements are ambitious.
The German automotive industry leads in diesel technology. It is also the world market leader in this type of powertrain. Half of all new cars that are sold in Western Europe are diesels. And half of all diesels sold in Western Europe come from German manufacturers. Equipped with the most modern exhaust treatment technology – NOx storage catalytic converters and SCR – Euro 6 diesels satisfy the strictest exhaust standards, including those for nitrogen oxides. It would therefore be a huge mistake for the environment and the climate if diesels were to fall into disrepute. Conversely, those who take climate protection seriously must favor rapid market penetration by modern Euro 6 diesels.
Our companies are continuing their innovation activities unabated. The German automotive industry invests around 34 billion euro every year in research and development worldwide, and over 50 percent of this is spent in Germany. That is over a third of all industrial research spending in this country.
The majority of this investment flows into the realization of our broad-based strategy. We are not backing just one particular powertrain, but are investing in the whole range, from the optimization of classical propulsion systems to plug-in hybrids and fully electric battery-powered vehicles, all the way to hydrogen and fuel cells.
When it comes to electric mobility, we have made excellent progress on the question of the “leading provider.” Our manufacturers have a large number of series models with electric drive on offer. And they are present in all important market segments, from small and compact cars to SUVs. During recent years the industry has invested more than 17 billion euro in this field, and the German automotive industry alone has provided 12 billion euro. However, we are still a long way from the second target – of Germany being the leading market for electric mobility.
For us to get closer to this goal, the policy-makers must rapidly put the necessary framework conditions in place. This means incentives to purchase the relevant vehicles. The Chancellor has given her word that preliminary decisions on improved framework conditions for electric mobility will be made by the end of the year. And that includes the creation of a charging infrastructure in Germany and Europe.
We know that no country in the world has ever mastered the market ramp-up without an effective boost from policies. A comparison of Norway and Germany provides a good illustration. In this Scandinavian country, whose passenger car market is only one twentieth of the size of Germany’s, approximately 24,900 electric cars were newly registered in the first nine months of the current year – which is two thirds more than in Germany (14,900). The result is that e-cars make up 22 percent of the entire market in Norway, while in Germany we are below the 1 percent mark (0.7 percent). In the Netherlands, too, e-mobility is picking up more speed. There electric vehicles account for over 6 percent of new registrations.
The electric models from German makers go down well with customers around the globe. For instance, this year alone (January to September 2015, cf. same period in 2014) we have increased our market share in the electric car segment in Western Europe from 27 to 43 percent. On the two important Western European markets for electric vehicles, the Netherlands and Norway, we are the market leader with 59 and 55 percent of the market respectively. We are also in a very good position in the US, the world’s largest market for electric vehicles. There we have more than doubled our market share, increasing it from 8 to 20 percent. Today one electric car in five sold in the US bears a German badge. On our home market in Germany we have a market share of 55 percent.
The mega-topic of Connected and Automated Driving dominated the 66th IAA Cars. In this field our manufacturers and suppliers continue to make progress at great speed. We aim to be the driver of innovation in digitization. In the coming three to four years alone, the German manufacturers and suppliers will invest 16 to 18 billion euro in the research and development of connected and automated driving. Digitization brings tremendous advantages: driving will become even safer, more comfortable and more efficient.
But here, too, the automotive industry cannot deal with the sea-changes accompanying digitization on its own; this will be possible only in cooperation with other industries and sectors, and with supporting policies. The benefit to the economy from intelligent mobility can be realized only if the technical and regulatory framework is planned for the digital infrastructure and its use. This infrastructure must be expanded rapidly. Furthermore, it is necessary to have a reliable legal framework for all those involved both in the European context and in the global context.
All eyes are turned to the Paris Climate Conference. The German automotive industry would very much welcome the conclusion of a climate agreement with binding participation by all the countries of the world. This is a huge opportunity that should be utilized. We assume that specific targets for individual sectors will be elaborated after the conference at EU level.
Today Europe already has the most ambitious CO2 targets anywhere in the world. It is right that we should move forward but we must not overdo things. Only if other continents also do more than issue declarations of intent will effective worldwide CO2 reduction be possible. A successful climate policy needs an industry that is a serious force for innovation and investment. For this reason it is important to maintain the balance between action on climate and economic development. I have already mentioned the fact that politicians have considerable scope for action in the field of electric mobility in particular, to promote progress on CO2.
To close, I would like to renew my appeal for the Transatlantic Trade and Investment Partnership (TTIP). If we are to remain successful internationally, companies will depend not least on accessible markets. TTIP is one of the very great strategic projects of our time. The debate should be a constructive one.
|November 2015||January – November 2015|
|Passenger Cars *)||Units||Change
15/14 in %
15/14 in %
|German makes incl. group makes||195.900||6||2.132.600||5|