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Bräunig: German auto industry continues backing Indian market

German pavilion with 15 suppliers in New Delhi – utilise growth opportunities Ladies and Gentlemen, I have pleasure in welcoming you most cordially to our press conference at the German pavilion at the Auto Expo 2014 Components. Germany is flying the flag here in India during the Auto Show. For we wish this vast and … Continued

German pavilion with 15 suppliers in New Delhi – utilise growth opportunities

Ladies and Gentlemen,

I have pleasure in welcoming you most cordially to our press conference at the German pavilion at the Auto Expo 2014 Components.

Germany is flying the flag here in India during the Auto Show.

For we wish this vast and impressive country, which is more like a continent in comparison with Germany, to utilise its potential for economic exchange and to continue strengthening international cooperation.

India has every opportunity to do so. Not only Germany will welcome it if the approaching elections result in a strong government that takes the initiative on economic policy. And stability is a major prerequisite for the negotiations with the EU on a free trade agreement, expansion of the infrastructure, and the economic development of this proud country.

Many German companies have already been active in India over a longer period. Many companies are willing to push projects and invest here given better overall conditions. The commitment of German enterprise in India during recent decades has been greater than that of many other countries. This is one reason why very high-ranking German politicians and diplomats have been active in India in recent days.

The German Federal President Joachim Gauck is currently on a state visit to India, accompanied by a large delegation from Germany. And the new Federal Government is also making sure it is represented here at the trade fair and welcoming the suppliers from our country. At the reception here at one o’clock, we are expecting Ms. Brigitte Zypries, Parliamentary State Secretary (Vice Minister) of the Ministry for Economic Affairs and Energy, as Guest of Honour.

This reception is being hosted by the Deputy Chief of Mission of the Federal Republic of Germany at the German Embassy in New Delhi, Mr Cord Meier-Klodt.

I regard that as a special signal to our small and medium-sized companies in particular. We are delighted to see this expression of support for the automotive industry.

The German auto industry also has a strong presence here in New Delhi. Fifteen suppliers have presentations at the official German pavilion alone. And another four suppliers from Germany have their own stands in Hall 6.

This means that Germany is the fourth largest exhibiting country at the Auto Expo Components, after India, China and Taiwan. We have more suppliers here than either Korea or Japan. And we are by far the non-Asian country with the most exhibitors. And the 12th Auto Expo – The Motor Show in New Delhi, which is taking place almost simultaneously, will be attended by the German passenger car manufacturers Audi, BMW, Mercedes-Benz and Volkswagen, along with the Volkswagen subsidiary Skoda.

We do not regard dividing the automotive trade fair in New Delhi into two parts – one for the suppliers and one for the car manufacturers – as the best solution. We welcome the fact that India wishes to rejuvenate its trade show infrastructure. But the suppliers in particular are stating clearly that in future they could see themselves presenting their innovations alongside the manufacturers again at one trade fair. So we would be pleased to see one large trade fair here again.

Ladies and Gentlemen, the presence of the companies demonstrates that the German automotive industry believes in India’s huge potential as an automotive market, despite all the economic challenges facing this country.

The Indian passenger car market enjoyed dynamic development up to the year 2012. In the period from 2009 to 2012, it grew by a good 50 per cent to 2.8 million units. However, a fall of 7.5 per cent was recorded in 2013, taking the volume down to 2.6 million new cars. Yet we remain convinced that given the right general conditions, India can and will resume a course of growth.

Such a path is not an easy one. Some hurdles still exist. But, as in other countries, it will pay off – just take a look at Europe.

One aspect is restricting inflation. Only a few days ago the Reserve Bank of India raised the key rate of interest to 8.0 per cent. That may help, but we also have to point out that an increase in the key interest rate will also indirectly make it more expensive to borrow money to purchase a car.

On the other hand, a recovery by the Indian rupee against the dollar (and the euro) will not only boost confidence on the part of industry and consumers, but will also ensure that imports to India become cheaper again. That will benefit Indian customers – and German manufacturers and suppliers who put their products on the market here.

The per capita income (in US dollars) has tripled since the year 2000 (from 461 dollars in 2000 to 1,414 dollars in 2013).

India’s population is 1.24 billion. Half of them are under the age of 27, and only just over 5 per cent are 65 or older. Furthermore, the passenger car density is 18 registered cars for every 1,000 inhabitants, which offers considerable potential. By comparison, Germany has 540 passenger cars for every 1,000 inhabitants.

When the Indian economy revs up again, this combination of a young population and low passenger car density will represent an enormous number of potential customers for new cars.

The weighting on the Indian passenger car market is shifting: the mini segment, which traditionally accounted for most new car registrations, has been shrinking continuously since 2010, from 47 per cent (in 2010) to 41 per cent (in 2013). Over the same period, the market share going to small cars has leapt from 3.5 per cent to 23 per cent. SUVs have doubled their share of the market since 2010, climbing to 16 per cent.

The German passenger car manufacturers lead the premium segment with a market share of over 80 per cent. Another plus point in the view of the German automotive industry is the fact that diesels account for a large 52 per cent of the car market in India, which is similar to that in Western Europe. As the German manufacturers and suppliers are leaders in technology with the clean diesel, they can expect to benefit in particular from a future path of growth on the Indian market.

The German carmakers also operate their own assembly facilities in India. For example, the Audi plant in Aurangabad builds the models A4, A6, Q3, Q5 and Q7. Assembly is based on imported parts and components. At present the Aurangabad plant also produces the Skoda models Octavia, Yeti and Superb.

The BMW Group has had its own plant in Chennai, on southern India’s east coast, since 2007. It builds the BMW 1 Series (three-door and five-door models), the 3 Series, the 5 Series (saloon), the 7 Series (long version), the X1, the X3 and the MINI Countryman. The Chennai factory will also start producing the BMW 3 Series GT in March 2014.

Daimler has its passenger car facility in Pune, producing the C, E, S, ML and GL-Class. The company is planning to increase its local production capacities in the near future by adding more models.

In addition, Volkswagen produces its models Polo, Vento and Jetta here.

The VDA has already initiated the German pavilion here at the Auto Expo in New Delhi within the official Foreign Trade Fair Participation Programme of Germany (AMP) five times, with the slogan “Made in Germany”.

The German pavilion is supported by the German Federal Ministry for Economic Affairs and by AUMA (Association of the German Trade Fair Industry). The trade fair company IMAG is responsible for the organisation.

As the initiator of participation, the VDA provides on-site support for the pavilion during the trade fair and is available at the stand in Hall 1A to assist in the areas of business information, potential co-operative projects and media inquiries.

The VDA also runs various events backing up the presence of the German automotive industry in India.

Furthermore, our “IAA India Day” is a regular event in Germany, held at the IAA in co-operation with our Indian partners ACMA and SIAM, and the Indo-German Chamber of Commerce (IGCC). This year again we would like to invite you to the IAA, the leading international trade show organised by the VDA. This year it is the IAA Commercial Vehicles, which will take place in Hannover from 25 September to 2 October. The IAA India Day is scheduled for 26 September.

Another important activity is the work of our Indo-German Working Group on Automotive. It comprises representatives of the Indian and German Governments, important automotive institutions and the automotive associations ACMA, SIAM and the VDA. The Working Group addresses topics that are significant for automotive mobility and its industry in both countries – such as the environment, safety, alternative drive trains and the overall conditions for bilateral trade. We are very grateful for this valuable platform and wish to thank all those involved for their support.

This brings me to trade between India and Germany and to the planned free trade agreement. Unfortunately, just recently negotiations on the agreement have stagnated somewhat. The approaching elections in India, and the European elections too, are making it less likely that a result will achieved soon.

The automotive sector in particular seems to be an important point in the negotiations. Our Indian partners know that the VDA has always worked for a fair result and a win-win situation, and continues to back such a solution – but it will require concessions from both sides. The EU and India should open their markets to each other, with the level of development of the industries taken into account by providing transition periods.

In India, however, some import duties on passenger car imports have most recently been markedly increased – to up to 100 per cent. And additional countervailing duties are imposed at the border crossings (e.g. 27 per cent here). Naturally, they constitute significant trade barriers that have also led to a fall in passenger car exports from Germany to India (-16 per cent in the value of exports in January to November 2013), but at the same time India is striving to step up its export activities.

So world-wide open access to markets is important for all of us – world-wide we are all in the same boat.

It is interesting to note that the Indian automotive industry’s trade in passenger cars with Germany actually demonstrates a surplus. Whereas in the first eleven months of 2013 Germany sold passenger cars to the value of 60 million euro to India, India supplied passenger cars worth 130 million euro to Germany.

For this reason, too, we hope that the Indian industry will actively support the free trade agreement with the EU as soon as the negotiations pick up speed again – as we assume they will, and to which we would give our wholehearted support.

Last year German suppliers delivered parts and components to the value of over 500 million euro to the Indian market.

Taking the entire Indo-German automotive trade – that is, vehicles and motor vehicle parts together – Germany has a trade surplus of 354 million euro (from January to November 2013).

The total volume of trade declined slightly last year, but it has already returned to twice that recorded in the crisis year of 2009.

For the Indian and the German supply industries, there is still potential for expanding bilateral trade. Our companies are here to support these objectives.

The German pavilion showcases the great expertise of the small and medium-sized supply firms.

Here are just a few examples:

The core business of A. Kayser Automotive Systems GmbH fromEinbeckis the assembly ofproducts for fuel tanks, engines and passenger compartments. The company has its own production facilities in seven countries, and its own marketing structures in five countries. Since 2013 the firm has had a marketing office in Pune. It also plans to enlarge its business in India if the markets develop positively.

ACTech GmbH,headquarteredin Freiberg, has a workforce of 380 producing rapid casting prototypes and small batch production castings. The company has branches in the USA, Turkey, Spain and France, and in 2005 it also set up a liaison office in Bangalore. It plans to expand business in ACTech products in India.

The firm Bizol from Berlin is a producer of engine oils, additives, technical sprays, industrial lubricants and greases. It was founded in 1998 and now operates as a distributor in over 60 countries around the world. The firm will also have its lubricants on the Indian market as of February 2014.

Dörken MKS-Systeme GmbH & Co. KG from Herdecke, North-Rhine/Westphalia, is the leading European manufacturer lamellar zinc micro-layer corrosion protection systems. The company produces exclusively in Germany, but has distributors in several countries. Since 2005 Dörken MKS-Systeme has also been selling its own products in India. Despite the current subdued level of growth, India is of major long-term importance to the company.

The Formel D Group from Troisdorf, Rhineland, is a premium service provider to the automotive and supply industry. Since 1993, Formel D has been a successful full-service provider for pre-sales and after-sales processes, and training courses for employees and business partners, and a developer of audio-visual communication, across all business fields. Formel D launched its services in India in 2008. The company expects to move into additional regions in the future.

With nearly 4,000 employees, the Hirschvogel Automotive Group from Denklingen in southern Germany is a successful manufacturer of components forged from steel and aluminium. Hirschvogel Components Indiawas founded in 2010 and in Ranjangaon, near Pune, it makes components for the Indian vehicle market. In view of the expected growth in India it is planning to expand its local business.

Hoerbiger Antriebstechnik Holding GmbH is part of the Hoerbiger Group headquartered in Schongau, and is one of three subsidiaries active in India since 1993. Given that local demand is expected to rise, Hoerbiger is planning to increase its production of valves, control units, service and synchronisers. There is also the possibility of a joint venture in propulsion technologies.

Huf Hülsbeck & Fürst GmbH & Co. KG, located in Velbert, is an automotive supplier of electronic and mechanical lock systems, driver access and authorisation systems, door handles and tailgate systems. The Huf Group is active in a total of 16 countries world-wide. Since 2007 the family-run business has had a subsidiary in Pune, where it employs 150 people. The company expects to expand its local production by adding a paint shop.

Leoni, in the Nuremberg region, has two subsidiaries, called Leoni Bordnetz Systeme and Leoni Kabel GmbH, at the German pavilion. The Leoni Group has 88 subsidiaries in 89 countries.

Leoni Bordnetz Systeme offers cable harnesses, electronic components and related development services for the automotive industry. In India the company has had a development team and a production plant for cable harnesses serving local industry and exports since the 1990s. Leoni has a huge potential for growth in this field.

Leoni Kabel GmbH produces single core and multicore automotive cables, aluminium conductors and battery cables, high-voltage cables, data transmission cables, coaxial cables, flat cables and innovative conductive materials. At present, 85 employees work at the company in India. It is planning to increase the workforce to 140. In contrast to the wiring systems division, a joint venture is not envisaged for expanding this area of business.

Scherdel GmbH from Marktredwitz is a successful player in technical springs/metal forming, assembly and joining technology, surface treatment, plus tool, machine and system construction. To date the company has exported technical springs and stamping and bending parts to India and it is now hoping to expand its business. Looking to the future, Scherdel sees the Indianmarket on course for growth following a period of stagnation over the next two years.

Wallstabe & Schneider GmbH & Co. KG from Niederwinkling, Bavaria, is specialised in the development and manufacture of precision seals. Since 2010 it has been operating in India through the joint venture company Divekar Wallstabe & Schneider Precision Seals Pvt. Ltd., with its own local production. Wallstabe & Schneider regards the development of the Indian market as positive, and is therefore planning to expand production.

Witzenmann GmbH from Pforzheim is a manufacturer of “flexible metallic elements” for all branches of industry. The company has 23 subsidiaries in 18 countries around the globe and since 2001 it has had two sites in India – in Chennai (vehicle parts) and Kolkata (industrial products). Owing to the expected rise in local demand, the firm wants to increase its production in India, whereby joint ventures would be one possibility.

The following companies are exhibitors at the German pavilion:

ACTech GmbH, BIZOL,Corteco India Pvt. Ltd., Divekar Wallstabe & Schneider Precision Seals Pvt. Ltd., Dörken MKS-Systeme GmbH & Co. KG, Formel D GmbH, Hirschvogel Automotive Group, Hoerbiger Antriebstechnik GmbH, Huf Hülsbeck & Fürst GmbH & Co. KG,Kapolnek GmbH, A. Kayser Automotive Systems GmbH, Leoni Bordnetz Systeme GmbH, Leoni Kabel GmbH, Scherdel GmbHand Witzenmann GmbH.

Please allow me to summarise:

– We are here with a German pavilion in New Delhi for the fifth time.

– The German manufacturers are also well represented with their premieres at the Auto Expo.

– Especially in times of economic difficulty, we stick to our course and focus on continuity.

– We believe the Indianpassenger car market has a growth potential that should be utilised.

– When the framework conditions improve, we expect the motor driving growth in this vast country to speed up again.

– A free trade agreement removing the trade barriers on both sites will bring advantages for India and the European Union.

– The Indian economy in particular could benefit if this country, with its young population, took steps to approach closer to the EU.

– The visit by Federal President Gauck underlines the importance of Indo-German relations. On behalf of the automotive industry, we in the VDA welcome this wholeheartedly.

Thank you.

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