We’ve all seen the powerful German carmakers’ incursions (mainly) into China in the past few years, though other markets are growing in importance too, like Russia, Brazil, India and even Mexico.
It’s funny how their overall output figure is set to rise for a fifth consecutive year in 2014, despite a shrinking home market as well as a continental recession that’s not only been hitting hard but also causing attrition.
Reuters explains that in spite of that, they are doing well thanks to sales around the rest of the world – really well. It reports that in China, they are looking at 17.1 million cars to be sold in 2014, and that represents a doubling of the 2009 figure, while the US is also expecting a fifty percent increase to around 15.9 million.
One wonders if the automakers in this case are merely meeting demand, or actually aggressively causing it through marketing, advertising and smart investments, because growth is all that matters in this industry, even when you have to go to ridiculously globalized lengths to sustain it.
I mean VW announcing that it will build seven more factories in China is clear indication for their future priorities. It would not be surprising at all for them to say, in 10-15 years’ time, that they would be closing down all of their European production facilities, blaming high wages and taxes, difficult economic climate and shrinking demand, then import cheaper made cars from either China, Mexico, Brazil or any one of its 105 plants scattered across the world.
The year 2014 does not announce encouraging news for Germany, where sales are expected to “drop almost five percent this year to 2.93 million, the second-lowest level since German reunification in 1990, VDA said, reflecting troubles in Europe where auto demand is hovering close to a two-decade low.”
There really is nothing to it, though, as Peter Fuss, the senior advisory partner for the Global Automotive Center of accountants EY (formerly Ernst & Young) explains; he puts it simply that “carmakers invest their money where sales markets grow,” and rarely distance themselves from this business-saving principle as a form of self-preservation.
Still, registrations in Germany may notice a rise in 2014, though; as demand is expected to grow, but Fuss said they’re actually still “far away from a genuine recovery.”
By Andrei Nedelea
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