German Automobile Industry Overview
In spite of the slowdown in many big markets like China and Western Europe, the German automobile industry is performing strongly over the past few years. In 2014, the German automobile industry generated a turnover of 367.9 billion Euros, the highest ever achieved by the industry . Out of this, almost two-thirds of the revenue was generated through exports and the rest from the domestic market, which shows the export focused nature of the industry . The reasons for this strong show are many that includes the global acceptance and appreciation of German engineering, quality of products and the brand value. The diesel-gate in 2015 has adversely impacted the Volkswagen group. Despite this, the German products are revered globally for their engineering finesse. The German auto industry imparts a great deal of importance to research and development activities and leads the world when it comes to the spending in automobile R&D. In 2014, the industry spent approximately 17.6 billion Euros in R&D, which was an increase of six percent over the spending in 2013 . The industry is also a major provider of jobs in the nation generating over 774,900 jobs in 2014, an increase of three percent over 2013 .
Trade and Investment Policy
Germany exports automobiles to a large number of markets spread across the world. German auto companies either do direct exporting of the automobile, its components or invest and build factories in major markets, a decision which is made based on the market, economic, trade, investment and legal scenarios. Access to the foreign markets remain a major key for the German automobile industry and as of 2014, the industry has over 2000 production sites outside of Germany . Owing to the local regulations including tariffs, import levies and other barriers to entry in markets across the world, the German auto companies since 2010 are producing more cars abroad than in Germany. As mentioned above, selecting either of the dual track- exports or FDI is based on market conditions such as in China, where the market size justifies setting up operations or India, where the high barriers to entry such as high import levies makes it impractical to adopt the export route . As of 2014, the German automobile industry produces approximately 9.3 million cars at its overseas locations, whereas the domestic production stands at around 5.6 million passenger cars .
Technology Evolution
The major focus areas for the German automobile industry for the future include sustainable mobility, e-mobility and connectivity .
Sustainable Mobility- The major focus is on improving the efficiency of the internal combustion engines, reducing the engine cubic capacity, development of alternate drive technologies such as electric, fuel cell and hybrid cars and achieve reduction in gross weight of the vehicles to improve their range, enhance efficiency and performance.
E-Mobility- Energy efficient automobiles are the new mantra, both in domestic and international markets. The whole world is moving towards achieving supreme levels of energy efficiency and German automakers are focused on becoming the world’s leading producer of electro-mobility solutions by 2020 .
Connectivity- Connected cars are the latest rage and is set to become a trend in the near future. Integrating technology with safety, comfort and travel time involves great deal of investment in research and development- one of the major areas where the German automakers outshine their counterparts in Japan, South Korea and other major auto markets.
Well Qualified Workforce
Germany at 42 million strong workforce is the largest in the EU and are famed worldwide for their engineering skills and high productivity. The nation follows a dual education system, where classroom learning is complemented by on the job training. The educational syllabus is framed by taking into consideration the inputs and requirements of the industry .
Changing Supply Chain Landscape
The supply chain structure is witnessing a sweeping change with the OEM-supplier relationship getting transformed by various factors like increase in the number of models, shortening product lifecycle, global demands, new assembly strategies, adoption of newer technologies, changing cost pressures, etc. . Consequently, new OEM models are shaping up with increased collaboration with the suppliers and increased supplier knowledge.
Works Cited
Germany Trade and Invest. Industry Overview: The Automotive Industry in Germany. Report. Berlin: Germany Trade and Invest, 2015. Report.
Thomas Bozoyan, Dr. Hans-Peter Hussen, Marc Lehnfeld. Economic Overview Germany: Market, Productivity, Innovation. Report. Berlin: Germany Trade and Invest, 2015. Document.
VDA. Annual Report 2015. Annual Report. Berlin: VDA, 2015. Document.
—. Facts and Figures - Overview. 2014. Website. 17 April 2016.
