The automotive industry and its suppliers are of key significance for value creation and employment in Europe and especially in Germany. With a turnover of around 335 billion euros, this sector generates almost 20 % of the manufacturing industry’s total volume of trade in Germany and, with its approx. 797,000 workers, provides about 13 % of the jobs in industry. However, these statistics only include those suppliers which are officially registered as »manufacturers of parts and components for automobiles and their engines«. But many companies are listed in other sectors such as the metal, electrical, plastics and rubber industries which also operate as automotive suppliers. Estimates of the Fraunhofer ISI based on input-output tables of the Federal Statistical Office show that about 990,000 people are employed in Germany’s manufacturing industry who work in all the upstream stages of automotive suppliers. This figure, which reflects the true significance of automotive suppliers, is about three times higher than the previously available statistical figures for this sector. This means that automobile manufacturers and their suppliers provide almost 1.8 million jobs in Germany.

The global automobile industry is currently facing a time of turmoil and upheaval. New car markets are rapidly growing in importance. For example, China became the world’s largest market for new passenger cars in 2009/2010, while sales on established markets are almost stagnating. Manufacturers and suppliers are facing the substantial business challenges of high global excess capacities, an increasingly differentiated product program right down to models for »niches-within-niches«, which means an ever smaller number of units produced per model, as well as product requirements which increasingly differ on a regional level. New drive concepts, especially electric mobility, will penetrate the market in the next years and changing framework conditions will result in altered market dynamics. These comprise mainly the expected steady increase in fossil energy prices and the enforcement of ambitious climate policy targets in the transport sector as well.

The prospective transition to new drive technologies in vehicle construction (hybrid, electric, fuel cell) certainly harbors risks for German car manufacturers and suppliers since their current know-how in conventional drives will be devaluated, at least partially, and important value-added steps will have to be modified (e.g. air conditioning and brake system), replaced by new ones (e.g. electric motors including battery and power electronics instead of combustion engines) or even disappear completely (e.g. exhaust system and powertrain). Attention should be paid here to Asian competitors in particular, whose skills in developing and building electric vehicles are becoming increasingly obvious.

However, these changes also offer the German automobile industry new opportunities. Besides their lead in the premium segment and highly efficient internal combustion engines (ICE) as well as the concerted effort by industry, policy-makers and research funding in electric mobility, entering the market for sustainable transport and mobility services also harbors great potentials. Such mobility concepts link a new form of using cars (»using instead of owning«) with unrestricted transition between cars, public transport and non-motorized transport, especially in urban areas. The automobile industry then plays the role of a mobility services provider, supplying the vehicles and an unrestrictedly accessible infrastructure and selling the mobility service. The first steps in this direction are already being taken, e.g. by Daimler with the Car2Go project in Ulm and Austin, Texas.

This type of supplemented business model would modify the value creation of the automobile industry but also accelerate the cycles of fleet renewal and improve the chances to influence technological change associated with this. Car sharing vehicles with lifespans of about five to six years - which is about half as long as privately owned cars make shorter life cycles possible and thus a faster introduction of emerging technologies.

Overall, it can be assumed that there are extensive opportunities being offered to the German automobile industry and its suppliers if they manage to combine technology leadership in alternative drive concepts, among others, with offering new electric mobility and other services which consider the individual, possibly regional, requirements of different consumer groups. The objective of this study is to examine the potentials of the German automobile industry from a systemic perspective with regard to changes on the global automobile market and the introduction of new mobility concepts. Recommendations for the political framework are to be derived from the results.

The results will be summarized in a final report (innovation report).

Objectives and approach

The planned TAB innovation report will provide a systemic view for the first time: from global market developments and modified mobility concepts to the position and future potentials of the German automobile sector. Up to now, only partial analyses have been made.

The analysis is conducted for a time horizon of 20 years up to 2030. It concentrates on passenger transport and car markets since the biggest changes are expected here in this period. Electric mobility is taken into account by including parallel TAB projects.

The following steps are planned:

Global development of the automobile markets

A European car market model (ASTRA-VFT) is expanded to the global level by including selected international lead markets and the volume of cars worldwide is predicted in two scenarios. The non-European lead markets considered are USA, Japan, China, Brazil, Russia, India and Korea, depending on the available data.

Export dependency and excess capacities

Export flows and capacities are analyzed based on statistical data and company databases/sectoral studies in order to estimate the export dependency of the German car industry and global excess capacities up to 2030.

Potential diversification and structural change

The diversification and structural change options of the German automobile industry will be examined in two (combinable) directions:

• Differentiation of the product range starting with the premium, volume, low-price/micro segments and, if applicable, going down to the »niche-within-a-niche« models.
• Diversifying by developing new mobility concepts and extending the value creation of car manufacturers by mobility services.

Shifts in the supply chain

Estimating the impacts on the automobile supply chain of globally changing markets combined with diversification strategies. Besides evaluating ISI’s production surveys of 1,484 German manufacturing companies, including 319 automobile suppliers, a short written survey of approx. 70 leading automobile manufacturers and suppliers is planned. The aim is to validate the information obtained on excess capacities and sales forecasts and to ask about the extent to which individual value chain steps and competences are affected by the identified technological and systemic developments.

Employment effects of structural change

Using a statistical approach based on an input-output model, a scenario analysis is conducted which considers the previous working steps (i.e. global scenarios and export successes, differentiation strategies and changes in the supply chain), and employment effects in the automobile value chain are estimated.

Synthesis

A synthesis of future structural change is made in order to derive potential and plausible development trends for the German automobile industry from the scenarios considered and to describe and assess their effects on value creation and employment in the automotive sector.

Recommendations for action

Based on the synthesis evaluation, options are given for the political framework needed to support positive structural change in the German automobile industry.