Description of business environment for the german automotive market

2. THE GERMAN AUTOMOTIVE MARKET

3. KEYS IDEAS
• First-class brands – BMW, Volkswagen AG, Daimler AG
• A strong and steady demand stimulated by one of the highest GDP
per capital
but also cultural factors
• An industry labeled for its quality and reliability
• Innovation is one of the pillars of the German Automotive Market,
sustained by
strong relationship between universities and research institutions
• A large network of small but competitive companies, for instance,
Germany hosts the largest concentration of OEM plants in Europe.

4. Investor opinion: These Industries have Potential in Germany
“Which three of the following industries do you regard as the main drivers of growth in
Germany?”
Source: Ernst & Young Standort Deutschland 2012.
Up to three responses possible. Total respondents: A representative panel of 201
international decision-makers.

5. EUROPE'S MOST ATTRACTIVE COUNTRIES
“WHICH THREE COUNTRIES ARE IN YOUR OPINION THE MOST IMPORTANT
INVESTMENT LOCATIONS DURING THE NEXT THREE YEARS?”
Source: Ernst & Young Standort Deutschland 2012.
Up to three responses possible. Total respondents: A representative panel
of 840 international decision-makers

6. WHAT TO REMEMBER
• German economy is one of the most attractive in EU
• Europe’s largest automobile market based on production and sales
figures.
• Germany is the European car production leader : some 5.9 million
passengers cars were manufactured in German plants in 2011
• The country can be a support for exporting to others countries. Around
77% of cars produced in Germany is 2011 were ultimately destined for
foreign shores.

7. COMPETITORS
Several major global firms (Robert Bosch GmbH, CalsonicKansei Corp., Benteler
Automobiltechnik GmbH)
Still, medium-sized suppliers account for 85% of the market
This diversity provides economic stability and growth
A great opportunity to gain a competitive advantage (differentiating ourselves
from the competition by extensively using or R&D facility, because OEMs
are trying to move the costs of R&D to suppliers)
Moderate power over buyers

8. CUSTOMERS
Many German car manufacturing companies (BMW, Daimler, Volkswagen,
Opel), which have 47 OEM sites in Germany
Concentrated in certain areas across the country (SW, SE, E), which are all
easily accessible (which might help us in facilitating JIT production, thus
gaining an advantage)
Eager to interact with suppliers to develop R&D partnerships (especially as
far as CO2 emissions are concerned)
Face a continuously growing demand and consequently need reliable
suppliers to provide high-quality, relatively cheap (this relates to the costs
we incur) car parts
The competition between them might also reduce their power over their
suppliers

9. COST
L A B O U R C O S T I N C R E A S E H A S B E E N T H E L O W E S T I N
E U R P O E .
A N N U A L I N C R E A S E O F 1 . 6 %
C O M P E T I T I V E N E S S I N T E R M S O F M A N U F A C T U R I N G C O S T
I S H I G H E R T H A N F R A N C E A N D I T A L Y A N D S I M I L A R T O
J A P A N .

10. COST
• The World Bank LPI ranking shows that Germany ranked 1st in Logistics
Performance Index (Transportation cost, inventory carrying cost,
warehousing cost, packing cost etc).

12. B E L G I U M :
P O P U L A T I O N : 1 1 . 1
M I L L I O N
G D P P E R C A P I T A :
$ 3 7 , 8 8 3
I N F L A T I O N : 2 . 6 %
G R O W T H : - 0 . 2 %
F D I I N F L O W : $ -
1 6 1 3 . 8 M I L L I O N
F R A N C E :
P O P U L A T I O N : 6 3 . 4
M I L L I O N
G D P P E R C A P I T A :
$ 3 5 , 5 4 8
I N F L A T I O N : 2 . 0 %
G R O W T H : 0 . 0 %
F D I I N F L O W : $ 2 5 . 1
B I L L I O N
Holland (Netherlands):
Population: 16.8 million
GDP per capita: $42,194
Inflation: 2.8%
Growth: -0.9%
FDI inflow: $-244.1 million
Italy:
Population: 60.8 million
GDP per capita: $30,136
Inflation: 3.3%
Growth: -2.4%
FDI inflow: $9.6 billion
Germany:
Population: 81.9 million
GDP per capita: $39,028
Inflation: 2.1%
FDI inflow: $6.6 billion
Growth: +0.9%
Largest economy in Europe and 5th
largest economy in the world in PPP
Economic review

14. CURRENCY/EURO-ZONE
L O C AT I N G I N A C O U N T R Y W I T H T H E
E U R O A L L O W S E A S I E R T R A D E F O R
W H E N W E D O C H O O S E T O F U R T H E R O U R
S A L E S .
W H E N T R A D E D O E S B R O A D E N T O O T H E R
C O U N T R I E S , T H E U S E O F T H E E U R O
W I L L B E A D VA N T A G E O U S O V E R E U R O P E
A S I T W I L L S AV E T R A N S A C T I O N C O S T S
E T C .
A L S O R E M E M B E R T H AT G E R M A N Y I S A
L A R G E P L AY E R I N T H E E M U A N D A R E
N O T S P E C I F I C A L LY S T R U G G L I N G A S
O T H E R C O U N T R I E S H AV E B E E N .
T H E E U R O - Z O N E I T S E L F I S C U R R E N T LY
M A K I N G A S L O W R E C O V E R Y A N D
G E R M A N Y A N D F R A N C E A R E S E E N A S
T H E D R I V E R S O F T H I S .

15. GERMANY, WORLD’S TOP-RANKED INFRASTRUCTURE

16. TAX ENVIRONMENT

17. A STABLE LABOUR COST

18. MOTIVATED AND DEPENDABLE EMPLOYEES

19. A HIGH SKILLED WORKFORCE

20. ENGINEERING EXCELLENCE

21. CONCLUSION