German Car Industry = Massive!

Every day I seem to come across another German car story or a story about a German in a key role in a non-German company. It’s never ending. You almost have to feel sorry for Opel right now – doing so poorly when the Germany seems to be dominating the car industry. Actually, you don’t have to feel sorry for Opel at all. Bastards.

I thought I’d take a quick look – just a basic skim – over the German car industry and some of the key Germans in other companies. I’m likely to have missed HEAPS of things in this, so feel free to add some more in comments if you feel so inclined.

——

MercBeerMercedes – After some quality issues a few decades ago, Mercedes seems to be getting a groove on releasing hit after hit. Now they’re trying to get younger while maintaining their premium position in the industry and the new A-Class indicates that they know exactly where they’re going.

It’s taken nearly 15 years of AMG ownership for Mercedes to really capitalise on it but now the merger has genuine momentum and people are looking forward to AMG editions with the same expectancy that people used to look forward to BMW’s new ‘M’ cars five years ago. Mercedes is definitely not just an old man’s car. Not any more.

Mercedes’ corporate parent, Daimler AG, also owns or has an interest in a bunch of other automotive and heavy transportation companies. This includes Smart, Freightliner, Western Star and others. Now that that funny business with Chrysler is over, it seems they’ve really hit their straps in the reinvigoration of their main automotive label – Mercedes Benz.

meanwhile in germany bmw beerBMW – Something strange has happened over the last couple of years. BMW are no longer the cars with a reputation for being driven by wankers and idiots. The automotive press are no longer falling over themselves to lay awards, along with an endless string of sugary superlatives, at BMW’s feet. Why did this happen? Has BMW tailed off somehow? Are they devoid of products that people want to swoon over?

No way.

The first thing that happened is the rise of Audi over the last few years and the resurgence of Mercedes, as previously noted. But the most interesting thing is the effect this has had on BMW’s sales.

Despite the rise of Audi and the resurgence of Mercedes, BMW sales haven’t dropped an inch. In fact, BMW are selling in record numbers.

The BMW Group recorded record sales of 1,845,186 vehicles in 2012, up 10% on 2011 and a record for the company. It’s not just group sales, however. Each of BMW’s brands – BMW, Mini and Rolls Royce – set sales records as well. The icing on the cake was BMW Motoradd, their motorcycle division, also selling more in 2012 than any other year in it’s 90 year history.

BMW may have lost a little of it’s gloss but it keeps powering ahead building plenty of cars that people want to buy.

volkswagen-bus-beerVolkswagen – VW were the third biggest car company in the world by sales in 2012. They missed out on being #2 by just 70,000 sales and if things continue on trend, they’ll overtake GM for that #2 spot this year. They won’t be far behind Toyota for the #1 spot, either.

Volkswagen sells passenger cars using 8 different brands that it owns 100%: Volkswagen, Porsche, Bentley, Lamborghini, SEAT, Bugatti, Audi and Skoda.

Now….. think about those vehicles for a minute and tell me the similarities between them (aside from having the same corporate parent).

There are only a few that I can think of, being mostly between VW and Audi.

What Volkswagen does exceptionally well, aside from building good quality vehicles with a noted focus on interior quality, is preserve and cultivate brand identity. People familiar with the car industry know that an Audi is made by the same global company that makes a SEAT, but nobody cares because the Audi has Audi quality and identity. The same goes all the way up to Bugatti.

This ability to keep so many balls in the air at the same time is why VW was able to generate a €15 Billion-with-a-B profit in 2011.

As an Alfa fan, I have to note that Lamborghini also owns Ducati motorcycles. There’s been some talk of Volkswagen wanting to buy Alfa Romeo from Fiat, too, which I imagine would be completed through the Lamborghini arm of VW’s business. That would be a nice little Italian mob if it were to happen and as an Alfa fan, I don’t think I’d complain.

OK, so those are German companies and there are no real surprises there, but what about these?

Qoros – You might be a little surprised to see that name here. Qoros is a Chinese-located and Chinese-Israeli owned operation, after all. At the head of the design tree, however – the heart of any car company’s operation – is a German. Gert Volker Hildebrand has got some experience too, having run the design team at Mini for 10 years before leaving at the end of 2011.

Hyundai/Kia – Like Qoros, Kia put a German designer in charge a few years ago. Former Audi designer Peter Schreyer became Head of Design at Kia in 2006 and Kia hasn’t looked back since. The new design language along with massive warranty support has seen Kia kicking goals all around the world. The powers-that-be at Kia’s big brother Hyundai were so impressed that they put Schreyer in charge of the whole family – President of Design for Hyundai/Kia. Have they encouraged Schreyer to bite off more than he can chew?

TATA – Everyone’s looking at China right now for growth in the automotive industry, and rightly so.

BUT….There’s another country with a billion-strong population that’s growing economically and won’t be too far behind China in terms of world significance – India.

Tata is the 18th largest automotive company in the world by sales. But did you know it’s the 4th largest truck manufacturer and the 2nd largest bus manufacturer (thanks Wikipedia)? Tata bought Jaguar Landrover from Ford 5 years ago and both brands have more than just survived the change in ownership. Jaguar is moving steadily and Landrover is powering along with the growth of the SUV segment and the release of the Evoque.

The German connection here is Carl-Peter Forster, the former GM Europe boss who joined Tata in 2010. Forster left Tata nearly two years later for family reasons, but remains on the Tata board.

I’ve left Opel off this list because they’re not doing particularly well. They seem to be in a state of constant upheaval and are regarded as a weight around GM’s neck by many, despite some pretty complimentary reviews about their vehicles in press reports here (especially the OPC range).

I have to admit that I don’t know enough about Ford’s German operations to comment at all. They don’t seem to be selling many Fords in Germany, though, with only the Fiesta and Focus making it into Germany’s top 40 private car sales models in 2012 (and even those two were well down the list).

Despite those two comparatively weaker companies, Germans seem to go gangbusters at making cars – and making them well.

I’ve always had a healthy respect for German cars but I can’t say I’ve ever been passionate about one. I’ve driven a few Porsches and BMWs in my time and whilst Porsches are still on my bucket-list, they’re the only German brand I’ve ever felt compelled to pursue.

If you’ve got any clues as to why that is, or if you think German cars are totally engaging, I’d love to hear why. They way they’re going, we’ll all be driving something German-owned or influenced soon 🙂

You may also like

8 Comments

  1. Well gm have owned opel for a very long time and if they cannot get it right by now they might just sell it to magma, BMW have reduced their glossy auto mag advertising spend and this may be affecting journalistic outcomes, current BMW lineup is plain ugly

  2. Agree with the overall premise here. One of the reasons that VW keeps such good product differentiation is paradoxically that they are more vertically integrated than other OEM’s. Just because everyone else does something doesn’t mean it’s the “right” thing to do.

    And witi regard to Opel, GM as a whole are struggling, why should Opel be any different?

  3. I think its interesting that the German companies are really seeing a lot of their success come from vehicles that are not produced in Germany.

    We all know about VW’s far flung efforts, from China to Brazil and, more recently, a return to US manufacturing.

    BMW’s and M-B’s USA production is well documented, but I was surprised to find that BMW’s South African plant not only supplies nearly 100% of 3-series sold in Australia, but more than 50% of 3-series sold in the US as well. Plus, that plant leads the company in initial quality measures. Who knew? (I’m guessing you did Steven.)

    ——————–

    I think GM’s issues transcend Opel and are due to the GM bankruptcy. GM were really on a roll, product wise, prior to their collapse. Unfortunately, a lot of projects that were nearly market ready were shelved when things started to go wrong. By the time they were ready to be back to speed, the market had changed and either there was no market for the products that had stalled (i.e. small Duramax diesel) or competitors’ offerings had met or surpassed what GM had been sitting on (i.e. the 8th gen Malibu). Opel have suffered from the multiple challenges of a depressed European marketplace, GM’s wider issues (as above), questions related to what GM could and could not do in terms of layoffs (from their negotiations with IG Metall and state officials) and, finally, the ongoing (and hard to understand) strength of the Euro.

    Additionally, Opel’s value to GM is, I think, additionally hurt by Opel not having a van offering that can be used in North America to compete with the Ford Transit and Ram ProMaster (aka Ducato), Opel having instead opted to rebadge Renault vans. Even GM’s recent partnering with PSA won’t help there, as PSA rebadge Fiat vans, not offering a vehicle in this segment.

    ——————–

    Ford will, I think, benefit in the end from their renewed efforts to not just pay lip service to the idea of “world cars”, but actually make and sell vehicles that are essentially the same globally. Still, although this will be good for Ford, as a company, I don’t think it will be good for Ford Europe. Europeans are a picky bunch and if they perceive their needs aren’t being met by Ford’s products (regardless of any empirical measures), they’ll choose other marques. I do think though, that the production efficiencies that Ford could realize from this, now being able to shift production globally based on sales performance and cost to produce, should help them in the long run.

    ——————–

    Finally, if you look at European market sales holistically, Mercedes, VW and Fiat are discounting pretty heavily, whereas Opel and Ford are not, which is doubly hurting their volumes (if not their revenue per vehicle).

    1. “Who knew? (I’m guessing you did Steven.)”

      Nope.

      I’m learning about all this stuff like most others. So much to read/write, so little time. Always appreciative of being able to count on others to fill the many gaps.

  4. You might find this article that was in the FT a couple of weeks ago useful. Nearly one in two cars built in Europe at the moment is made in Germany.

    http://www.ft.com/intl/cms/s/0/dd15d2d8-686f-11e2-ad8f-00144feab49a.html

    The big question of course is can they keep this momentum going when more players enter the luxury market i.e. our Asian colleagues. I’m not so sure. Part of the advantage German companies have is the euro and if that starts to fluctuate, its going to have a real hit on profits (just like the Japanese companies profits are very dependent on the yen). Of course the real advantage is thinking long term and scale. VW’s new platform has fewer parts and can be used by more models than ever before. It makes the new golf cheaper to build, more reliable, and more fun to drive. Hence I can’t see how Renault, Fiat, and Peugeot can compete with it.

    1. “VW’s new platform has fewer parts and can be used by more models than ever before.”

      Yep…that’s it.

      http://www.cbt.com.my/2012/02/03/vw-introduces-new-mqb-platform/

      Starting to make a huge differnece in their cost structure. The only possible “fly in the ointment”, whch was pointed out by someone is, that if this cross model platform has a flaw that requires a recall, then instead of just one marque being involved with low numbers, they are now open to a massive recall involving every model using that platform. Has the potential of costing them a LOT of D-marks.

  5. Is it really so much the German companies? Or is the key to being successful a company’s ability to built high-tech/luxury cars; an ability that may well influence buyers’ decisions even for more basic cars. Look at the companies:
    -BMW: RR and 7series vs. Mini and 1/3 series
    -Mercedes: Maybach (defunct) and S class vs. A/B/C class
    -Volkswagen: Bentley, Phaeton, A8 vs. well most others

    The two German car companies that are not in the luxury segment, i.e Opel and Ford Germany, are not at all doing as well.

    And outside of Germany, Volvo and Jaguar are not doing bad, though they presently are not active in the basic market, while those that have given up on their luxury cars, like Fiat, PSA and Renault, are starving (yes, I ignore the Quattroporte).

Leave a Reply

Your email address will not be published. Required fields are marked *