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January 14, 2019

Detroit – Germans emphasise US importance

As the last 'winter' Detroit show opens, German trade association VDA's managing director has stressed the importance of the US market to his country's automakers.

By Olly Wehring

As the last ‘winter’ Detroit show opens, German trade association VDA’s managing director has stressed the importance of the US market to his country’s automakers.

“The United States, along with China and Europe, is among the most important sales regions for the German automotive industry. In 2018 the German OEMs sold 1.34m light vehicles there, equalling the good result from the previous year and mirroring the trend on the overall market. Customers in the US bought 17.2m light vehicles. This took the market share going to German brands of passenger cars to nearly 8%,” said Braeunig at the North American International Auto Show.

The German group brands sold around 16.5m new cars worldwide last year. “With stable trade conditions, in 2019 we could break through the 17m mark for the first time,” Braeunig said.

He also stressed the US is important as a production location.

“German manufacturers and suppliers are major employers in the US. In 2018 around 118,000 people were directly employed at their plants, more than 80,000 of them at our suppliers. Our US workforce grew by about 8,000 compared with the previous year.”

Suppliers also operate around 330 production facilities. “The companies provide jobs and create value in hundreds of municipalities in the US. The German automotive industry therefore makes a key contribution to American prosperity,” Braeunig said.

German manufacturers have increased their production in the US significantly in recent years. The US is the German OEMs’ third largest foreign location. While total US production has doubled since 2009, German OEMs have almost quadrupled production in the US. In 2018 approximately 750,000 German brand light vehicles were manufactured in the US.

“The US is an important export hub. Our OEMs exported 56% of their US-made vehicles to destinations like China or Europe. Forty-four percent remained in the US.”

While the German firms produced around 750,000 vehicles in their US plants, only 470,000 new vehicles were exported to the US from Germany.

With an obvious reference to President Trump’s recent tariff war with China, the VDA chief said: “Recent developments once again proved that the automotive industry and the jobs it provides depend heavily on free and fair trade – in the US, in Germany and elsewhere. Additional tariffs and local content measures to protect the industry have negative effects both on the local economy and on competitiveness. This is why we are deeply concerned about the direction that US trade policy has taken since 2017. We should always keep in mind that together the EU and the US account for 50% of world trade. We could shape global trade as partners, not opponents.”

The German automotive industry supports a transatlantic agreement on industrial goods in conformity with WTO rules, which should include the automotive sector.

Braeunig said: “Removing import tariffs and reaching the greatest possible understanding on regulations would be the right way to go. That will benefit both sides.”

On the trade conflict between the US and China: “The situation has a major impact on our companies in the US. In 2017 German automakers exported around 150,000 light vehicles from their US production to China. One in five of all cars that we built in the US went to China. Owing to the trade conflicts, German automakers exported only 95,000 light vehicles from their US production to China in 2018.

“We therefore hope that the two countries will be able to resolve their dispute. China’s temporary reductions of import duties are an encouraging sign, as are last week’s talks between Chinese and American officials. But the situation still remains precarious, and another escalation might be just around the corner.”

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