Clean-Diesel-Blitz in Full Swing

"German manufacturers have once again prevailed on the difficult U.S. market with excellent results. In 2007 they grew against the general trend and have boosted their sales by 3 percent to 948,000 light vehicles. We are confident that we will be able to continue to increase our U.S. market share even further this year and believe that the chances of passing the 1 million mark are excellent," emphasized Matthias Wissmann, President of the German Association of the Automotive Industry (VDA), at the VDA press conference in Detroit. In addition to maintaining a strong position in the car segment, German brands saw gains primarily in the light trucks market, where sales rose by 14 percent in 2007.

According to Wissmann: "Consequently, we grew more quickly in this segment than all other competitors. Apparently, our fuel efficient models are precisely what buyers are looking for during a time of ever-rising per gallon fuel costs."

In the past 12 months alone fuel prices in the United States have increased by 43 percent. The VDA President explained the success of the German automakers’ strategy in the world’s most important automotive market: "We are betting on the premium class and on clean diesel – for cars as well as light trucks. We are also launching a full frontal attack in the compact car segment."

Every second German-made car sold in the United States is already a premium class vehicle; the Germans have increased their market share in the luxury car segment to 41 percent.

"Clean diesel is the second pillar of our strategy. The market potential for a clean, fuel efficient and high performance self-igniting diesel engine is continuously expanding in the U.S. The required improved diesel fuel quality is now available nationwide. More and more U.S. car buyers are interested in the benefits clean diesel, the world’s efficiency and fuel consumption champion, brings while making driving as enjoyable as it can be," Wissmann said.

The VDA President also emphasized that "the German brands are the first to actively seize the huge opportunities clean diesel opens up in the United States. They are also pioneering new standards. Here in Detroit they are introducing new models that comply with the toughest emission limits. As a result, clean diesel is marketable in all 50 U.S. states, including California."

The fact that this message is also being embraced in the USA is evident in initial market data. In the first nine months of 2007, Mercedes had already more than doubled its sales of clean diesel vehicles. Audi, BMW and Volkswagen are ready to roll out their models.

"It is absolutely appropriate to name 2008 the year of breakthrough for clean diesel in the United States. Beware and do not misinterpret the market share of only 3 percent, which is indeed still low. It is just an indication of the calm before the storm and is driven primarily by model cycles," Wissmann said. "According to J.D. Power projections, the percentage of diesel vehicles in the total number of new vehicle registrations in the U.S. will multiply to 15 percent by 2015 – and the German brands will land in the top rankings." Last year, diesel cars still outperformed hybrid models in light vehicle sales at the rate of 480,000 versus 350,000 units. In the light truck sector, which, at 53 percent market share, is still larger than the car segment, German manufacturers reaped the benefits of structural changes: While revenues in the large SUV segment, which is the traditional stronghold of U.S. manufacturers, dropped 11 percent last year, the more compact Cross Utilities Vehicles (CUV) gained a respectable 18 percent. "The Germans are particularly strong in the CUV segment. Given the increase in fuel costs it certainly comes as no surprise that car buyers are looking for more efficient vehicles that combine adequate performance with lower fuel consumption. This feat can only be achieved by drives that are more technologically exacting – which is on par with the core competencies of German automakers and automotive suppliers," Wissmann said.

While the overall U.S. light truck market saw a decline of 6 percent over the past four years, German brands were able to boost their sales of light trucks on the U.S. market by 60 percent to 180,000 vehicles.

According to Wissmann, "An official Premium SUV segment does not currently exist; however, the German brands are in the process of successfully creating this new standard." Audi, for instance has doubled U.S. Q7 revenues in 2007, while Mercedes saw a 100% increase in its G Class. VW has a presence with its Touareg, the Porsche Cayenne generated a plus of almost 20 percent and the BMW X5 saw its sales jump by more than 30 percent. New products – such as the GLK by Mercedes – are in the process of entering the market. "All of this proves: If you offer intelligent and state-of-the-art solutions, even the highly competitive light truck market in the United States offers a wealth of opportunities," confirmed the VDA President.

In the car segment, German brands also swam upstream and against the trend, increasing their sales by 1 percent to 768,000 units. As a result, the German market share in the car category has risen to more than 10 percent. The ranking of top-selling German brands in the United States in 2007 is led by the BMW 3-series, the VW Jetta and the Mercedes C Class hold second and third place, followed by the BMW 5-series and the Mercedes E Class. New rules of the game apply to the compact car segment – the keyword here is the smart fortwo, which is in high demand on the U.S. market.

The German automotive suppliers are also expanding their strategic position in North America. Approximately 250 subsidiaries, joint ventures and licensees of German suppliers are now active on the North American market. The number of facilities they operate have more than tripled in the past 10 years.

Wissmann presumes that the negative trends on the U.S. market – the real estate crisis, tougher credit lines, increased fuel prices – will continue to leave their mark. Another factor is that consumer demand, which still grew by 2.8 percent in 2007, is likely to drop to the projected 1.8 percent growth level. "Given these indices, we expect the total U.S. market for light vehicles to come in at around 15.7 million light vehicles, which translates into a decline of well over 2 percent. The pressure on the market will continue to be evident. Nonetheless, we expect the German brands to continue to grow," Wissmann concluded.


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