The Automotive Industry in Germany
Last week our article spoke about the Automotive Industry in Spain and the importance of the industry in the economy.
Today we are going to take a look at German, Europe’s largest automotive market both from the standpoint of sales and that of production. Over 30% of cars made in Europe are produced in Germany and 20% of new cars registered every year are sold on the German market.
In 2013, the German automotive industry churned out 13 million vehicles, that is over 17% of the worldwide total. The production of passenger cars was 5’4 million which confirmed Germany’s leading place in Europe.
Therefore, it is not surprising that this is the leading motor of the national economy. Sales reached a total of € 361,000 million in 2013 placing firmly in the number one spot as that is the equivalent of 20% of total sales in the country. The industry gives jobs to some 756,000.
German manufacturers of passenger cars and light commercial vehicles exported € 200,000 million in 201 which was up 3% on the previous year’s figures. 77% of these vehicles wen to export marketsin 2013.
Betting on R + D
German automotive firms invested € 18,000 million in R+D in 2013 which, to put it in perspective, is one third of total worldwide automotive investment.
The German automotive industry is a leader in R+D both at home and in Europe as this also one third of total German investment in R+D and provides employment for 95,000 people.
If further proof were needed of the importance given to R+D in Germany, it can be found in the fact that 9 of the 10 companies that registered most patents in 2013 were from the sector. In 2012, 51% of sales in the industry came from products that included some element of innovation.
The companies involved are well aware of the need to maintain a high level of investment in R+D so as to maintain the leading position in the world market. Some 40% of companies will be increasing spending on R+D this year.
For any firm contemplating moving into the German market, the following are the channels which should be taken into account when selecting the one most suited to an individual company’s requirements and needs:
- Direct contact with potential customers: working personally with German manufacturers with factories in the country.
- Sales agent or distributor. Ideally, one who is already supplying the industry with compatible components.
- Business partners. Form an alliance or joint venture with a local company that wishes to expand the range of products they are already selling into the industry. Whist it is probably the most difficult when searching for the ideal partner, it is by fair the best as far as easing market-entry is concerned. When going hand-in-hand with an established local company that knows the rules of the game and the standards expected by the customers, many a door is opened with greater ease than going it alone.
VDA: Verband del Automobilindustrie.
The automobile industry in Spain
Spain is the 2nd larger car manufacturer in Europe and 11th worldwide. It is also the 1st Industrial Vehicle Manufacturer in Europe, including light vehicles. The map below shows the 9 multinational brands established in Spain and its 17 manufacturing plants.
90% of the vehicles manufactured in Spain are shipped abroad to 130 Countries. The Spanish Auto-Parts Industry is another key factor to the success of the automotive sector. A thousand of companies belonging to 720 entrepreneurial groups are located in Spain, providing a fast and customized service to manufacturing plants. This industry turns over more than 27.500 million Euros, 60% belonging to exports.
After a five-year old recession, the Spanish commercial vehicle market closed 2014 with impressive figures. The local market increased by 31.6% in 2014, leading the growth rate among the European Union country members. This promising new trend in the Spanish market is expected to continue during 2015.During the first two months of 2015, the Spanish commercial vehicle market has grown at 27% rates.
Analyzing the different market’s subsectors, we found out that the most dynamic one was the light commercial vehicles market. In 2014, 113,863 new light commercial vehicles were bought in Spain. These figures are 33.2% higher than those obtained in 2013.
The heavy commercial vehicles’ sales in Spain experienced a 25.6% increase. The overall sales in this subsector reach to 13,808. The sales among the EU decrease by 6%.The medium and heavy commercial vehicles sales decrease by 8% in the EU, but the Spanish market confirmed its strength posting a 23.2% increase in 2014.The medium and heavy buses and coaches sales slightly increase (+1.4%) in the EU, the growth rates were significant higher (+15%) in the Spanish market.
In 2013, 27.617.785 vehicles, a 1.2% decrease compared with the 2012 figures, formed the Spanish vehicle fleet. The commercial vehicles were 5.130.066 (18.6% of the overall fleet).
Spain is one of the leading EU countries in the so-called Eco-Electromobility market. Spain contributes to Eco-Electromobility as a major component designer and manufacturer and as provider of Infrastructures and Network Intelligence.
Automotive companies such as Renault, Mercedes-Benz, Peugeot or Nissan are already manufacturing full electric powered and hybrid vehicles in Spain. There are also Spanish manufacturers of full electric vehicles (e.g. Comarth). Likewise, Spanish auto-parts companies are already providing specific components and systems for electric and hybrid vehicles.
The Spanish Government started subsidizing in 2014 the purchase of electric vehicles. Both private individuals and public organizations can receive the mentioned subsidy. The Spanish Local Governments Federation has already expressed his support to this program. The city councils and regional governments are expected to play an important role buying new electric vehicles and promoting their use. The monetary aid depends on the type of vehicle purchased. The aids vary from 6.500 € (7.065 USD) for the purchase of a private car to 20.000 € (21.736 USD) for the acquisition of an electric bus.
The Government expects to relaunch the local electric vehicle market with this measure. The new environmental objectives, agreed by all the EU countries, put pressure among the European governments to reduce the pollution and expand the use of renewable energy. For this reason, the European governments are starting to implement aid-schemes to promote the use of renewable energies among its citizens and industries.
The industries based in EU will also have to do a great effort to reach the new environmental objectives proposed by the European Union. For example, the truck manufacturers IVECO, which have two factories in Spain, have already started producing hybrid vehicles in Spain.
Some facts concerning electro mobility:
- There are currently more than 100 eco and electro mobility projects with Spanish participation.
- 74 Spanish companies and technology centers have taken part in 60% of the European projects in this area.
- 80 new Spanish products/technologies compiled for the Spanish Green Cars Conference 2013.
Companies need to consider the following market penetration strategies:
- Direct contact with potential clients: work directly with truck manufacturing companies with production plants in Spain.
- Business partners: companies that are already operating in Spain and selling components to the Spanish automotive manufacturing industry. These companies should offer a range of complementary products. This channel speeds up the market entry process, since the companies already have a client portfolio that trusts the client and will be open to hear new collaboration points.
- Direct contact with utilities and public services companies.
- Joint-Venture with a company wishing to strategically widen its portfolio and open a new business line. Establishing a business relationship with a company or entity focused on the automotive industry and with already a business line related to environmentally-friendly solutions.
- As a form of prescription and lead generation, it would be interesting to join local associations that promote the use of renewable energies among the automotive subsectors. These associations have direct contact with plenty of vehicle manufacturers based in Spain and they can also influence the governmental action.
 Proyecto de Movilidad Eléctrica (http://www.movele.es/index.php/mod.pags/mem.detalle/relmenu.17/relcategoria.1009/idpag.6)