Transcription

1 Annual Report 2011

2 THANK YOU.

3 Mobility binds us together. It allows us to discover new things, meet friends, go to work, run errands. And it makes growth and prosperity possible for all of us. Our mobility today would be inconceivable without the invention of the automobile 125 years ago. And with ten patent applications a day in this land of ideas, it is reinvented every day. The result is increasingly safe, environment- and climate-friendly, and comfortable mobility for all of us. We owe this to the more than 700,000 people who have made Germany the most successful automotive nation in the world. We are presenting some of them here. And we extend our thanks to all of them.

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5 Annual Report 2011

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7 7 Foreword In the Jubilee Year of the invention of the automobile, the global markets are in robust shape. Following on from 2010 the year of recovery from the serious financial and economic crisis in the first months of 2011, thanks to its global presence, former high levels in production and sales in the German automotive industry were reached or even surpassed. Here, the two-pillar strategy of our enterprises, combining export with increased production directly in the growth markets, is paying off. The situation has also stabilized in the markets for transporters, trucks, buses, and trailers and superstructures that is to say, in the areas of our industry that had been hardest hit by the crisis. However, this annual report certainly does not ignore the possible risks in the market. These include prices for raw materials and energy, as well as the debt situation in some Euro-zone countries, which is by no means overcome. Nor is the danger of inflation yet averted. Moreover, our enterprises have had to react fast to the consequences of events in Japan, in order to keep the supply chain stable. In addition, some policy plans have to be critically assessed such as plans by the EU, which aim to make diesel fuel dearer by altering the Energy Taxation Directive. Precisely from environmental and climate viewpoints this would be unacceptable, and thus it has righty met with resistance from the German federal government. This year stands not only for 125 glorious retrospective years of the automobile, but also for a new historic turning point: the dawning of the age of emission-free road transport. Here, the National Platform for Electric Mobility (NPE), with the substantial participation of the German automotive industry, has done decisive preparatory work. The NPE s reports of November 2010 and May 2011 clearly define the steps that are necessary in order to achieve the federal government s declared target of one million electrically powered vehicles on our roads by 2020, and make Germany the leading market for electromobility. It goes without saying that we will also maintain high standards of vehicle safety and comfort. However, these aims can only be achieved if the framework conditions are right. Here, we are relying on close coordination with policy. The German automotive industry itself is contributing the lion s share towards ensuring that the great efforts in research and development succeed, because it is well aware of the challenges, for instance in terms of range and loading times, and the still considerable price difference compared to conventional cars. If policy, science and industry tackle this task together, the change of paradigm will generate big chances for manufacturers and suppliers and indeed for customers in Germany as a location for industry, and for employment. At the same time, passenger cars with conventional drives still had a high efficiency improvement potential of 25 percent by the end of this decade alone. With even more energy-efficient engines, hybrid drives, new materials for lightweight construction and the possibility of exploiting second-generation biofuels, we are making a big contribution to resource conservation and climate protection.

8 8 F o r e wo r d This year s annual report impressively underlines the progress that has already been made. In 2010 our manufacturers again achieved a bigger reduction than our competitors in the CO 2 emissions of new cars registered in Germany, and we now offer more than 300 models with a fuel consumption of 5 liters or less per 100 kilometers, corresponding to CO 2 emissions of less than 130 grams per kilometer. If consumption in the premium segment today has gone down to a level reserved for medium-sized or even small cars just a few years back, this demonstrates the progress that has been achieved by our manufacturers and suppliers in the last few years alone. The German automotive industry as a whole invests about 20 billion Euros per year in research and development, of which approximately half goes into innovations for fuel-efficient drives. All those interested in the present state of competitiveness of the German automotive industry can go and see for themselves at the IAA International Motor Show in Frankfurt. Many European and world premieres await visitors to the show. For the first time, there will be a separate area devoted to alternative drives, where manufacturers and suppliers will be presenting state-of-the-art of technology in this future-oriented field. Look forward with me to the upcoming IAA International Motor Show. With best regards, Matthias Wissmann President, German Association of the Automotive Industry

9 9 Contents Foreword 7 Facts, Figures and Data about the German Automotive Industry 13 The German Automotive Industry in the Context of the Global Economy 14 Facts and Figures a Summary 22 The Situation in the Motor Industry 24 Developments for Trailers, Bodies and Buses 36 State of the Market for Automotive Suppliers 42 General Conditions of the Automotive Industry 51 The Transport Policies of the EU and the German Government 52 CO 2 Regulation for Vehicles in the EU 58 The Trade Policy of the EU Preparing the Way for Growth 61 Raw Material and Energy Supplies 65 Current Tax Policy 70 Transport and Infrastructure Policy 81 Road Traffic Mobility Mainstay 82 Limiting the Burden of Charges 87 Infrastructure for Growth and Employment 91 National Field Trials with the Long Goods Vehicle 96 Liberalizing Long-Distance Bus Services in Germany 99 Environment, Climate Protection and Technology 103 Innovations in Environmental Protection 104 Climate Protection: German Brands Make Progress in Avoiding Emissions 107 Spark Ignition and Diesel Engines 109 Hybrid Technology 116 Electromobility A Long-Term Option for Cars and Light Goods Vehicles 118 Fuel Cell Drive 126 Eco-Innovations Protection of the Climate Begins with a Good Idea 127 The New Vehicle Fuel Consumption Labeling 129 Air Conditioners 131 Environmental Protection Related to Production 132 Materials in Auto Manufacturing 136 Joint Research Under the Aegis of the Association for Research in Automotive Technology 140

10 10 C o nte nts Safety and Technology 147 Traffic Safety in Germany and Europe 148 The Joint Project Safety of Small Transport Vehicles 151 Developments in Driver Assistance Systems 154 The 13th Technical Congress 159 Symbiosis of Active and Passive Safety Systems 160 Headlight Technology Seeing and Being Seen 162 Revision of Vehicle Inspection Regulations 164 Theft Prevention 166 New Directive for EC Type Approval 168 Technical Harmonization of Radio Frequencies 170 sim TD More Safety and Environmental Protection 171 Quality Management 175 Quality Management 176 Logistics 187 The Logistics Situation in the Automotive Industry 188 The VDA Logistics Congress The VDA Logistics Award 191 The Practical Forum on Logistics The New Electronic Invoicing Concept 192 The Law, Sales and After-sales 201 Current Developments in Car Distribution 202 Sustained Development of Vehicle Servicing 204 Status Quo of EU Consumer Law is Guaranteed 206 European Contract Law a New Approach 207 EU Design Protection for Innovations and Jobs 208 Ancillary Copyright for Press Publishers 210 Automotive Manufacturer Banks Continue Expansion Trend 211 Current Developments in Public Procurement 213 Automotive After-sales 215

11 11 The International Motor Show 219 The International Motor Show 220 Historic Vehicles 225 Stronger Commitment to Historical Vehicles 226 Communication 233 Communication Strategy 234 Index 237 List of Figures and Tables 238 Index 240 Imprint 244

12 Cover: Marc Kapischke - industrial mechanic, sample management, Valeo Schalter und Sensoren GmbH, Bietigheim-Bissingen

13 Facts, Figures and Data about the German Automotive Industry Florian Bankoley, degree in business administration, Master of Science in European Management, assistant to board of management, Robert Bosch GmbH, Gerlingen-Schillerhöhe

14 14 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry The German Automotive Industry in the Context of the Global Economy Economic upturn Since the end of the severe recession, the global economy has entered a recovery phase. The main feature of this phase is the stormy upturn in threshold countries. In 2011, however, the recovery is losing some of its headway. All over the world, the recovery processes from the crisis have started to lose steam. Forecasts from the International Monetary Fund (IMF) and the OECD have estimated growth for 2011 at around 4 percent. Global trade will grow by 7 percent. Regional discrepancies in economic growth will continue to increase, however. The new global economy has several drivers and its epicenters have shifted (see figure entitled Share of world GDP ). The established markets in the traditional strong points of Europe, North America and Japan are either stagnating or growing slowly, while the main areas of growth are now Asia and the BRIC countries (Brazil, Russia, India and China) and other emerging markets. Two-thirds of global economic growth in 2010 came from threshold and developing countries. These countries are currently involved in building modern industrial sectors and improving their infrastructure. They need investment goods to fuel their growth. There is strong demand from upward economies for German machinery, plant and chemical products, as well as for durable consumer goods. Despite their improved dynamic, the need for investment and an increased focus on wealth will continue in threshold countries. Economic power of the threshold countries on the increase Proportion of world GIP (in individual prices, in US dollars) G7 Threshold and developing EU Asia Latin America Middle East and north Africa CIS Central and Eastern Europe Southern Africa Sources: IWF, BDI

15 15 The USA continues to be the largest economy in the world and an extremely important factor for global development. In the short to medium term, however, it is only expected to undergo moderate expansion. The Japanese economy has initially recovered from the consequences of the global financial crisis. The severe natural disaster of the earthquake and tsunami, followed by the reactor accident in Fukushima, has given the country a significant setback in the growth process, at least temporarily, especially in view of the high levels of national debt and the central bank s policy of low interest rates, which had already largely reduced the room for further expansive impulses on the part of the state. In the euro zone, the tendency of national economies to drift apart has continued. Whilst Germany will grow twice as fast as the remainder of the euro zone in 2010 and 2011, Spain and particularly Greece still find themselves in a recession. The loss of confidence in the solvency of some European countries has resulted in a sustained euro crisis. The relative weakness of the euro against the US dollar that this has brought about has now made products from the euro zone cheaper, the main consequence of which has been to promote German exports. The shifts that have taken place over the last decade are also reflected in international trade. While Germany has managed to maintain its exports at around the 10 percent level, the share of exports from Japan and the USA has fallen from around 20 percent in 2000 to around 13 percent in The Chinese economy, on the other hand, increased from 4 percent to around 10 percent, which saw the Chinese take over the title of export world champions from Germany. The increase in gross domestic product in Germany has been the highest since reunification. This makes it easy to forget the crisis that Germany actually faced. Never before in its post-war history had the country s gross domestic product collapsed so dramatically as it did in 2009 by 4.7 percent compared to the figure for In 2010, however, the economy was once again beaming with confidence. Growth of 3.7 percent meant that it rose by twice the EU average. In fact the economy managed to return to its pre-crisis levels during In other words, the economy had undergone a V-shaped recovery, meaning a rapid decline followed by a comparatively striking upturn (see figure entitled Business climate ). Germany recorded its highest growth since reunification General economic development (ifo business climate) Business climate for the automobile industry versus processing sector ifo Index Automobile industry Processing sector Source: ifo

16 16 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry The upturn has two strong supports domestic demand and exports. The fact that the German economy is focused on selling goods to the world is one of the major reasons behind its success. In 2010 exports accounted for around 46 percent of German economic output. This level of success also attracted a certain amount of jealousy, with some countries demanding in 2010 that Germany should reduce its exports so that other countries could become more competitive. This may be understandable from their own points of view, but the reason that Made in Germany is such a successful model is because German companies beat their international rivals by supplying high-quality products and good service. Furthermore, Germany makes an important contribution to the growth dynamic throughout Europe, since its own record imports create a good deal of demand among its European trade partners. Germany can therefore justifiably maintain its label as the economic motor of Europe. Although it started with foreign trade, the upturn in Germany is now increasingly also being sustained by the domestic economy. The success of the economy has resulted in higher consumption and increased demand for investment goods. The spending power of private households in 2010 increased more strongly in 2010 than at any time since Employment reached record levels in 2010 with 40.5 million people in work. Meanwhile, inflation remained moderate at just 1.8 percent. Economic development before, during and after the general economic crisis can also be shown clearly using the economic clock diagram for the processing industry. The figure Situation and expectations shows how the business climate from the boom phase in autumn 2008 passes through the upturn and recession quadrants before once again being established in the boom quadrant after several months of upturn. ifo Business Climate Index in the processing sector Position and expectations indicate boom Upswing Boom Expectations for the next 6 months Jan Jan Dec Jan Jan Jan Jan Recession Downturn Assessment of the business situation *Balances, seasonally adjusted Source: ifo

17 17 Significance of the motor industry continues The German motor industry now also finds itself on a firm footing once again (see figure entitled Automotive business-cycle clock ). By combining strength and working closely with politicians, the motor industry led the main German industrial sector through the financial and economic crisis with measures such as short-time working (see box), environmental subsidies and economic funds. What is more, the industry managed to maintain its core workforce at German production sites. Extended short-time working helped to stabilize employment levels Short-time working Normally companies can apply for a period of up to six months of short-time working when the economy is weak. The legislators can extend this period to up to 24 months. For the hours during which they are not required to work, the workforce receive 60 percent of their net wages plus a child supplement where applicable. This proved a masterstroke. Overall in 2009, applications were made for short-time working for around 3.5 million employees. At its peak, in May 2009, some 1.9 million employees were affected. The system is expensive, but nevertheless cheaper than redundancies. The Federal Labor Agency estimates that at least 300,000 jobs were saved by short-time working in 2009 alone. ifo Business Climate Index in the automobile industry Automotive business-cycle clock Upswing Boom 60 4/10 6/10 7/ /10 8/10 Business expectations /09 5/09 1/10 11/09 3/10 10/08 10/10 12/10 9/10 1/11 6/08 3/08 4/ /09 9/08 7/ /08 11/ Recession Downturn Business assessment Source: ifo

18 18 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry The upturn in the motor industry is particularly significant as a result of the massive importance of the industry for the German economy as a whole. This is because the motor industry is the most important sector of industry in Germany. The automotive industry is the most important branch of the economy With a turnover of 315 billion euros, the industry accounted for at least 20 percent of the total turnover of German industry in The motor industry is one of Germany s biggest employers. It employs around 714,000 people, representing an increase of 55,000 on the figure from 16 years ago. The proportion of employees in the German motor industry compared to German industry as a whole has now increased to 14 percent. If we include all the employees who work in sectors that are dependent on cars, the total rises to over five million. Over the last year, German manufacturers built a total of more than 12.7 million vehicles. This means that one in every six motor vehicles built in the world bears the logo of a German company. With its large proportion of foreign sales, the German motor industry also maintains domestic jobs due to the increasing proportion of goods supplied for the vehicles and exports of the vehicles themselves, with every three jobs created abroad securing one in Germany. The innovative medium-sized supply industry makes a major contribution to stabilizing the labor market. This industry employs around one million people either directly or indirectly. Approximately two-thirds of its total turnover, which amounts to over 60 billion euros, is made on the domestic market. No other industry invests as much in research and development as the motor industry, with a total of almost 20 billion euros being spent on this in 2010 alone. This means that the industry accounts for more than one-third of the total R&D investment of German industry as a whole. In addition, German car manufacturers and suppliers are among the leading patent applicants in the world. The motor industry plays a very important role in exports. Three out of every four cars built in Germany are sold to customers in other countries. In 2009, the German motor industry exported products with a total value of more than 130 billion euros and imported vehicles and parts worth around 64 billion euros. The balance of trade surplus involving motor products is therefore nearly 67 billion euros. In Germany, too, the road is by far the most important transport carrier. It carries around 80 percent of the total traffic in terms of people and more than 70 percent of goods.

19 19 However, not all companies have left the crisis behind them. Furthermore, the remaining economic risks must not be ignored, as the discussion focusing on the future of the euro and the stability of the financial markets and public budgets in the periphery countries around the euro zone clearly demonstrates. Other possible sources of risk to the economy include the prices of energy and raw materials, the restricted access to rare earths and the tensions which currently prevail in international currency markets. Economic risks must not be ignored Furthermore, the motor industry is facing some massive challenges. New competitors, primarily from Asia, are entering the markets, technological change towards alternative drive types must be managed correctly and the shift in the balance of global markets must be taken into account. At the same time, mobility requirements and customer needs are also changing. The positive developments of the German industry after the crisis have been possible due to the fact that the industry is strong. The great international competitiveness of its companies is one reason why Germany is the only established industrialized country that has managed to defend its share in global production at around 6 percent. In view of this, it must be the objective of industrial policy to support the industry since it is the main driving force behind the wealth of the nation. The successful management of the crisis by the German government during 2009 and 2010 must now be replaced by policies which continue to improve and strengthen growth. A strong industrial basis for success Need for a genuine industrial policy Technological change Industrial policy New markets New competitors Source: VDA

20 20 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry Policy must give a clear commitment to support industry European industrial policy is reduced to limiting damage The industrial policy of the German government with its clear commitment to industry is a step in the right direction. It is right that the government is giving the required attention to the core sector of German industry. At a European level, on the other hand, politicians continue merely to pay lip service. An active industrial policy to increase the competitiveness of companies is not taking place in Europe. Instead European industrial policy is reduced simply to preventing major industrial collateral damage against the backdrop of all-powerful climate protection legislation. The Lisbon Strategy, which the European Union was to agree by the year 2010 in order to create the most competitive and dynamic industrial region in the world, has failed. One of the reasons for this is that the number of EU countries with a high industrial base is falling. The union now comprises 27 member states and the majority of them do not have an industrial core at all. This is particularly clear when we consider environmental and climate protection policy. Central institutions such as the council and the commission have simply not demonstrated that they have an adequate understanding of the motor, chemicals and mechanical engineering industries. New legislation focuses on one-dimensional ecological needs without paying any attention to the consequences and correlations for industry. It is the EU member states without any great industrial basis that are driving this legislation forward. It appears that conditions and limit values for industries cannot be strong enough for them. One example of this is the demand by the EU that has just agreed to make carbon dioxide emissions regulations for cars even more stringent. Already carbon dioxide emissions from newly registered cars must be reduced to a fleet average of 95 grams by 2020, which means a reduction of almost 45 percent compared to The financial costs of this to the industry are enormous. And the continuing demands of Brussels mean that these requirements will continue to rise in the future. High burden caused by one-sided climate regulations The consultants McKinsey have calculated that the regulation of carbon dioxide emissions from cars will result in costs to German motor manufacturers of around 115 billion euros between 2007 and The costs of preventing each metric ton of carbon dioxide are higher for the motor industry than any other sector. This excessive regulation is often described as a commitment to green industry and employment. The well-worn theory is that only stringent climate protection policy will create jobs and growth. This claim and the suggested automatism in this blinkered form are one of the biggest smokescreens of modern day politics because it ignores the central factor of prevention costs. After all, one of the main features of an environmental policy of this nature is the ratio between costs and benefits, since every metric ton of carbon dioxide saved is just as beneficial to the environment, but the cost of saving each metric ton differs from industry to industry. The main political rule of thumb must be to save emissions of carbon dioxide where they can be saved at the lowest possible cost. The dilemma is all the greater since governments around the world have failed to agree a coordinated method of making such savings. This merely means that economy and ecology are becoming increasingly divergent.

21 21 Europe is the leader in implementing reasonable global climate targets anyway. Therefore we do not need any more stringent unilateral restrictions but an international level playing field. Otherwise manufacturing, and therefore jobs, will simply be exported to regions with poorer environmental standards. The economic harm from such a move will hit Germany hardest of all since we still have a large industrial base. The latest economic crisis demonstrated one thing above all others, namely that a stable economy cannot be built on banks and services alone. If there is no industry, the economy has no foundations. This means that uncontrolled state debt often goes hand in hand with a lack of industrial competitiveness and increases the susceptibility of a country to crises. Therefore the institutions of the European Union and the individual member states must strive to make Europe a stronger industrial location. Only if key European industries are strong will the union of countries as a whole be able to compete. Europe must be strengthened as an industrial location For Germany this means a revision of European policy. Using the old alliances, such as the one with France, Germany must seek to form new alliances, for example in Eastern Europe. This is where the German government must play its part. It must use these new alliances to act as the driving force behind changing policy to become better for industry and commerce within the European Union. In Germany itself, the need to consolidate the budget must not prevent much-needed public investments. In an international comparison, Germany is at the lower end of the scale with investments of just 1.7 percent of its gross domestic product. Without investing in replacements, we will suffer a net investment quote oscillating around zero which means that the German economy will be facing depletion. In Great Britain the rate is 2.7 percent, in France it is 3.3 percent and in the USA 3.6 percent. Twenty years ago the net investment quota in Germany was 9.2 percent of GDP. Germany therefore urgently requires investment in education, research, infrastructure and a resource-efficient economy. Furthermore, Germany s growth potential in future will be more heavily affected by demographic change than in other countries. With this in mind, the German government must take action to secure jobs for the future. To ensure that the scarcity of skilled workers can be overcome, Germany must make better use of the potential of its domestic labor force and also permit greater immigration for skilled workers. Politicians must demonstrate to the nation as a whole that these two things are complementary. Without engineers it will not be possible to create more jobs. For many companies, immigration has become essential to enable them to continue to manufacture in Germany. This is why we must open our doors to highly skilled immigrant workers. Germany must open up to skilled immigrant workers

22 22 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry Facts and Figures a Summary Turnover in 2010: on the way back to former glories Foreign trade becoming increasingly important Over the last year, the German motor industry recorded revenues of more than 317 billion euros, an increase of 20 percent over the previous year. Some 118 billion euros of this came from domestic trade (+5 percent) while around 200 billion euros of turnover for the companies came from foreign markets. The significance of foreign trade has continued to grow over the last few years. The year 1996 was the last year in which the companies making up the German motor industry recorded more turnover from domestic trade than from exports, but since then the share of revenues has fallen to its current level of just 37 percent. Last year, the companies in manufacturing group (manufacturers of cars and commercial vehicles) recorded turnover of more than 249 billion euros, an increase of 20 percent. As expected, turnover at home fell by 3 percent after the termination of the environmental subsidy scheme. Foreign trade by German manufacturers rose by 33 percent and reached a new record level at some 175 billion euros. It therefore took just one year for the levels recorded before the crisis to be reached again and even surpassed. Manufacturers of trailers and bodies suffered most from the crisis. Turnover in this industry fell in 2009 by 46 percent, and the recovery in 2010 was rather moderate by comparison, despite being a rather healthy increase of 20 percent to 6.5 billion euros. Nevertheles the monthly figures indicate that the turning point has also been reached in the trailer and body industry and it continued to gather pace as the year went on. Business within Germany still makes up the majority of this business, accounting for 56 percent of the total, and is now on the rise again. Foreign trade increased by 28 percent over the full year and now accounts for 44 percent of the total turnover again. The supply industry also underwent good growth during Turnover in the industry has risen by 23 percent to almost 62 billion euros. This means that the record level from 2007 (68 billion euros) has still not been equaled. With a volume of 40 billion euros (a rise of 20 percent), domestic business still accounted for almost two-thirds of the total turnover of the German supply industry. Foreign trade rose by 30 percent. Overall the supply companies in Germany managed to take advantage of the excellent export dynamic of their customers. At the same time, the increased global presence paid spectacular dividends. The motor industry is securing the future through R&D Number of employees involved in research on the rise Last year the motor industry once again made a very important contribution to research and development in Germany. According to budget figures, its R&D costs rose in 2010 by a good 3 percent to 19.6 billion euros. German manufacturers and supply companies were responsible for one in three of every euro spent on R&D in Germany. Therefore, the German motor industry was once again by far the most innovative industry in the country in Overall the research departments of manufacturers and suppliers employed more than 89,000 people in That represents an increase of 2,000 over 2007 before the crisis struck.

23 23 Employment: core workforce maintained The companies along the automotive added-value chain managed to maintain their core workforce with a good deal of effort. Compared to the turnover figures, which dropped by one-fifth in 2009, the number of employees in the industry proved very stable with a fall of just 3 percent compared to the value from Since the start of 2010, a further 4,000 new jobs have been created. The industry s global presence has a positive effect in Germany The development of the employment numbers proved to be very heterogeneous. Manufacturers of cars and commercial vehicles stabilized their employment levels during 2010 at a level of around 400,000. At the last count, the trailer and body industry employed a total workforce of 28,800. Compared to the dramatic fall in turnover that the industry recorded, this once again indicates the importance of skilled workers in the industry. In the supply industry, the number of employees rose in 2010 by more than 5,200. Although this means that the industry has still not reached the levels of the time before the crisis, the increase is an impressive indication of the dynamic of the industry and of the fact that the global presence of the German motor industry continues to be a driving force for jobs in Germany.

24 24 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry The Situation in the Motor Industry Global motor industry recovering fast thanks to China Growth predictions exceeded The development of the motor industry in 2010 was considerably better than expected. At the start of the year the forecasts for global car sales were at levels of +1.5 to +3.5 percent. This assumed that sales on the global market would increase with the USA recording a rise of 11 percent and China of 10 percent. In fact the forecast increases in the USA were reached and those for China were beaten by a considerable margin, which means that global sales of cars actually rose by 8 percent to 61.7 million units. Production now covering demand storage effects overcome Global production of automobiles has risen quickly again after the dramatic fall recorded in Global car production rose by 24 percent while production of commercial vehicles increased by 32 percent. At the same time, sales and production figures were increasingly convergent. This was designed to put an end to the storage movements, which resulted in greater divergence between these two values during the crisis year of US light vehicle market weaker than expected German industry improves its competitive position in the USA The US light vehicle market suffered the fall-out from the crisis during The comparatively high unemployment figures and the continuing real estate crisis had a negative effect on consumer attitudes. Nevertheless the light vehicle market rose by 11 percent to 11.6 million units. Demand for cars rose by 4 percent while sales of light trucks increased by 18 percent. The share of standard cars in sales of light vehicles fell to 48.8 percent. German manufacturers once again improved their position compared to their rivals and increased their market share to 7.6 percent during Overall they sold 880,700 vehicles on the US light vehicle market, representing an increase of just over 15 percent. After the belts at the NAFTA plants had almost come to a standstill during 2009, production rose rapidly in 2010 due to the positive development of the global economy. Last year, a total of around 12 million light vehicles (an increase of 39 percent) and just over 243,000 trucks (a rise of 20 percent) were manufactured. Total product rose by 39 percent. The USA remained the number one production location in NAFTA with a share of 64 percent of the total production volume of light vehicles. Nevertheless, production plants in Mexico recorded gains and managed to increase their share of the production volume of light vehicles to 19 percent. During the last year German car makers increased their production of cars and light trucks in the NAFTA region by one-third to a total of 738,000 units. The majority of vehicles manufactured in the NAFTA region by German manufacturers were exported with just over one-third being sold in the USA. Overall last year, 12 percent of total overseas production by German manufacturers was accounted for by NAFTA. The German motor industry is therefore gradually making itself more independent of current fluctuations while at the same time underlining the major significance of North America for global production and as an export hub.

25 25 China continues to power ahead The Chinese car business recorded increased demand of more than one-third (34 percent) last year, which meant that it continued to catch up to its Western equivalents. In addition to its rapid economic recovery, the economic program introduced by the Chinese government in 2009 also played a major role in promoting sales of cars last year. With almost 11.3 million units sold, sales of cars, SUVs and MPVs in the People s Republic of China have almost doubled in the last two years alone. German manufacturers performed particularly well in this dynamic market by securing a market share of just over 18 percent, meaning that almost one in every five new cars sold in China originated from a German manufacturer. German manufacturers have market share of around 18 percent The number of cars built in China exceeded the 11-million limit last year, representing an increase of more than one-third on the level recorded in With a total of 18.3 million motor vehicles manufactured, China therefore continues to head the list of the largest global production locations in the motor industry and has built a clear lead for itself. Upward trend continues in India As expected, the car business also underwent rapid development in India during This growth market recorded an increase in sales of new cars of 31 percent to 2.4 million units during the last twelve months. During 2010, German manufacturers grew faster than the market as a whole and managed to increase their sales by more than three-fold. Passenger vehicle production up 30 percent Car production in India beat the levels of the previous year by 30 percent with a total of 2.8 million units built. The main driving force for this growth was increasing domestic demand. The number of exported vehicles recorded a slightly lower increase of 7 percent. The dynamic of the Indian economy is primarily based on private consumption. With a share of almost two-thirds, consumption is powering economic growth to a vastly greater degree than is the case in other Asian markets. South Korean production and exports rise again The Korean motor industry recorded a moderate increase in sales of 6 percent during 2010 with more than 1.3 million units sold, and thus continued its steady growth. Demand for cars rose by around one-fifth in 2009 as a result of a state incentive program. Sales of German vehicles in 2010 increased by a massive 60 percent compared to the previous year with a volume of just over 54,000 units. The share of German brands in the Korean car market therefore rose by a little more than 4 percent during the last twelve months. As a result of the stable domestic market and increasing demand from many important overseas markets, production in South Korea increased by approximately 222 percent to around 3.9 million cars last year. Of these, around 2.6 million vehicles were exported almost 30 percent more than the previous year.

26 26 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry Southeast Asia the next hotspot? Growing demand in Indonesia, Thailand and the Philippines Away from the major sales markets, car demand elsewhere in Asia was also very dynamic. Overall almost 1.6 million new cars were sold in Southeast Asia during 2010, which represents an increase of more than a quarter. The Indonesian car market recorded the largest growth with an increase of 51 percent. Indonesia is one of the largest markets in the region with a volume of new registrations of 541,500 cars in Demand for cars in Thailand also rose by almost a half last year. The rise in demand in the Philippines rose by around 30 percent. Increases in sales of cars in Taiwan (+11 percent) and Malaysia (+2 percent) were slightly weaker but nevertheless positive in The countries of southeast Asia are also gaining in importance as a production location. Last year, car production was increased by more than 36 percent to around 1.7 million unit. Russia on its way out of the crisis The Russian car market ended the year with an increase of sales of 30 percent. After demand was down by a quarter during the first three months of the year, the launch of a scrappage scheme in March played a successful role in increasing demand for new cars. Over the full year, over 1.9 million vehicles were sold in Russia, placing the market very much on the road to recovery. Notwithstanding the fact that the state subsidy scheme was restricted to new cars manufactured locally, sales of German brands rose by 27 percent during the year. The production of cars in Russia, which fell by almost 60 percent during the economic slump, doubled in 2010, recording production volumes of around 1.2 million units.

27 27 Eastern Europe from boiling point to zero and back? The new EU countries proved to be a highly dynamic growth region at our back door. Although the recession did bring to light the massive economic imbalances in the region. Sales of cars collapsed very quickly over a wide area. Sales up in Poland, the Czech Republic, Slovenia and the Baltic countries However, the market in these new EU countries stabilized increasingly during the second half of the year. With more than 800,000 new car registrations in 2010, sales of new cars failed to reach the levels achieved in the previous year and fell by 3 percent. Furthermore, sales of cars in Slovenia (+6 percent), the Czech Republic (+5 percent), Poland (+4 percent) and the Baltic countries (+15 percent) rose compared to the equivalent figures for The continuing poor economic outlook meant lower car sales in the other EU 10 countries. Sales of German brands developed much better than the market as a whole. In 2010 around 354,000 cars with a German logo were sold in the new EU countries (+2 percent). This meant that the market share of German manufacturers rose by more than two percentage points to 44.1 percent last year. In contrast to the overall market development, which still showed a slightly downwards trend, production of cars in the EU 10 countries during the last twelve months rose by 9 percent to around 3.2 million units. Demand for motor vehicles in Turkey underwent very dynamic development during Over the full year, the Turkish car market grew by 38 percent to a total of 509,800 new vehicles. This followed a rise in sales of more than one-fifth during the previous year. Western Europe sales do better than expected after the withdrawal of government subsidies Registrations of new cars in Western Europe reached a level of around 13 million units, a fall from the previous year due the good results produced on the back of subsidies not being matched after these stimulus programs were withdrawn in However, the fall in demand was just 5 percent less than had been forecast at the start of the year. Although sales in the Big 4 countries increased at the beginning of the year, the car business in the major Western European markets overall was somewhat subdued. In Spain (+3 percent) and Great Britain (+2 percent), for example, the figures from the previous year were beaten marginally, while France (-2 percent) and Italy (-9 percent) suffered a fall in sales over the year as a whole. The somewhat smaller markets in Western Europe recorded a major rise in new registrations in Only in Greece were car sales down by more than one-third as a result of the problems faced by the national economy. Drop in demand lower than expected Once again in 2010 German manufacturers managed to maintain their position on the Western European car market. Nevertheless, in keeping with the overall drop in the market as a whole, sales of German brands also suffered a decline (+5 percent). With a share of almost 47 percent and around 6.1 million new registrations, almost one in two new cars in 2010 was supplied by a German car firm. New registrations of cars with diesel engines once again rose in Western Europe in With a share of 51.7 percent, more than one in two new cars in Western Europe was once again a diesel in In Belgium and Luxembourg as many as three-quarters of all newly registered cars featured a diesel engine.

28 28 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry Recovering economy helps global demand for commercial vehicles Sales trending positively again, but still remain low The commercial vehicles market also experienced a better year than expected in 2010 after the internal commercial vehicle market suffered very badly from the effects of the global financial and economic crisis in the previous year. Sales of trucks and buses in 2010 returned to an upwards trend once again in many foreign markets. However, the volume of new registrations in many countries was still at a relatively low level in many countries. In the class over 6 metric tons the market grew by 35 percent helped by the strong economy in China. Even without China, growth rates were more than one quarter. And only if we include China in the calculations (after all, every other heavy commercial vehicle in the world was sold there) will figures for 2011 return to the levels from before the crisis. The triad markets in particular still have a long way to go before they return to their previous high levels. Sales of trucks on the US market have more than halved since In the middle of last year, the first signs of recovery were seen on the US commercial vehicle market. This development continued during The US truck market grew by 9 percent in 2010 with a total of 217,700 units sold. Nevertheless, the volume of truck sales in 2010 was still approx. 45 percent below the long-term mean value, which means that there appears to be a good way to go before the former glories of the US commercial vehicle business are reached again. The fast economic recovery was also noticeable on the South American commercial vehicle market. Sales of trucks and buses in 2010 grew sharply in 2010 both in Brazil (+44 percent) and in Argentina (+75 percent), to a total of 214,800 vehicles, after demand had collapsed by more than half in In China sales of commercial vehicles (which was also subsidized by state programs) recorded growth of around 29 percent to a total of 6.8 million vehicles. The greater increase in demand with a rise of more than 40 percent was the heavy commercial vehicle segment over 6 metric tons. With a volume of around 1.3 million units, every second heavy commercial vehicle in the world was sold in China. Overall sales of heavy goods vehicles rose by more than 30 percent, while sales of buses and minibuses increased by more than one quarter. The rise in economic activity also resulted in an increase in the production of commercial vehicles by more than a quarter. The commercial vehicle business in India last year also underwent major growth and rose by 45 percent compared to the previous year to 652,700 units. Demand last year particularly for medium and heavy goods vehicles increased by more than half last year (+58 percent). In Western Europe, meanwhile, sales of commercial vehicles during 2010 experienced growth of 10 percent to over 1.7 million units. This meant that almost half a million vehicles fell short of the result of 2008, but the commercial vehicle markets of Western Europe continue to stabilize. Over the full year in 2010, the number of new registrations of vans was around 11 percent higher than the previous year, whie demand for heavy goods vehicles rose by 3 percent. Sales of buses in 2010 fell by 9 percent in Western Europe during 2010.

29 29 Foreign manufacturing exceeds German production German automotive companies emerged from the crisis in 2010 firing on all cylinders. They increased their overall car production by almost one fifth to more than 11.6 million units. That was an improvement on the 2007 production record of almost 700,000 vehicles. In 2007 almost one car in every six produced worldwide was German-branded. Germany s automotive companies thereby pulled off the considerable coup of getting over the significant downturn of the 2009 crisis in surprisingly short order. Their global production posture enabled them to respond very quickly to increased demand, especially in Asia and North America. For the first time, German manufacturers overseas production of 6.09 million cars (+25 percent) outstripped domestic production, which totaled 5.55 million vehicles (+12 per cent). This illustrates once again that there is no reason why ramping up production outside one s domestic factories should necessarily cause domestic production to decline. On the contrary, additional production facilities abroad suck in exports, especially from suppliers, thereby securing German jobs.

30 30 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry Domestic production driven by exports Production in 2010 exceeds pre-crisis production of 2008 Car production at German plants increased by 12 percent to around 5.6 million units during 2010, returning it to a level above that recorded in The figures just failed to match the record results recorded in This means that production in Germany rose more quickly than in Western Europe as a whole (+10 percent). During the courses of the year, the majority of stocks were reduced, production ran at full speed due to the full order books and for five months exceeded the half-million threshold. Global presence solved the crisis with export regions outside Europe The global presence of German manufacturers played a major role in getting production and full use of capacity back on track during 2010 at German plants (including those of German suppliers). An export volume of more than 4.2 million cars (+24 percent) just failed to match the record result of 4.3 million established in The weightings of exports underwent a dramatic change during In 2009, approx. 61 percent of all exports were destined for markets in Western Europe. Last year, that share had fallen to 53 percent. The share sent to China rose from around 9 percent to almost 11 percent. More than 12 percent of exports went to the USA, while the equivalent figure for the previous year was less than 11 percent.

31 31 So is this a temporary effect as a result of the scrappage schemes that have now expired in a number of Western European countries, or is it the start of a permanent shift? On the one hand, the Western European market is with almost 13 million units a long way from its highest levels, with sales of more than 14 million cars being recorded in the region in After the difficult sales crisis in 2008, the stabilization caused by the scrappage schemes in 2009 and the correction in 2010, the European market will slowly climb back to its pre-crisis levels and will soon once again be approaching its record level. The market share of German brands is still high and will retain its performance on the global market. On the other hand, sales elsewhere, and particularly in Asia, will continue to rise at a high rate in the medium term. The US market will also undergo positive development, albeit at a slower rate than in the threshold countries. The German brands play an important role in this. A considerable share of the market supply will continue to be ordered for export even if local production figures continue to rise. Mobility costs fuel prices proving a major burden to drivers The car costs index produced by the German Federal Department of Statistics rose by 3.7 percent during This means that drivers were hit by the second-highest growth rate since the year percent Auto-Inflation in 2010 Running costs were the main factor that drove up the index, with the price index for fuels rising by more than 11 percent. This made 2010 one of those years to feature very high average fuel prices. The price of super grade gasoline rose by 10.6 percent with the rise for diesel being even higher at 12.8 percent. However, purchasing a car did not result in higher bills, with the price of a new car falling by 0.1 percent according to the car costs index. The price of used cars rose slightly by 0.6 percent. And it must be noted that the market for used cars was much livelier in German market quality rather than quantity The German car market in 2010 was still dominated by the environment subsidy. The falls in new registrations were recorded at 23 percent to around 2.92 million cars lower than was initially feared at the start of the year. In its original annual forecast, the VDA advised that the range would be between 2.75 and 3.0 million units. It was emphasized, however, that a result at the lower end of this scale appeared to be a realistic outcome. The year 2010 also produced a number of surprises. Gross domestic product rose by 3.6 percent, powered by very strong exports. And the labor market provided what was certainly the most welcome news of all. For 2011, the forecasts for the economy as a whole show that the dynamic from 2010 is likely to slow but all the signs continue to be very positive. Above all, private consumption will continue to be a major factor for growth. However, the prospects for the economies of Germany and the world are certainly not free of risks. The imponderables on the financial markets, the dynamic of China and the raw materials markets have the potential to slow down the future upturn. However, there is still good reason to remain realistically optimistic. Over the course of the year, the car market developed as expected to a large extent. Until September, there was a dramatic fall in domestic orders, reaching a rate, at its peak, of -64 percent. In September 2010 (exactly twelve months after the subsidies from the scrappage scheme had run out), orders then rose for the first time since the crisis by 20 percent. Risks should not be underestimated The order books based on domestic demand followed an identical line. While at its peak in 2009 there were almost 600,000 cars on order, this figure initially fell at the start of The German market was given a thorough shake-up by the environmental subsidy in The structures of the market, which had been in place for some considerable time, underwent considerable change as a result of these subsidies. The share of diesels, the structure of vehicle keepers, the mix of engine types and market shares underwent massive adjustment.

32 32 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry However, it was clear that this would only be a temporary effect. During 2010 these situations returned to their normal structures. The German brands once again increased their market share in 2010 to 70 percent. This means that the German brands have now recaptured their long-term share of the German market while shifts to imported cars proved to be a one-off and due entirely to the subsidies. The picture is similar in the various segments of the market. The vehicle categories that were given particular priority by the subsidies underwent the opposite trend in Overall the very small, small and compact segments made up a total of 62 percent of the German new car market in In 2010 this market share returned to its normal level of around 53 percent. The value of new registrations of diesel cars fell sharply in This led to heavy falls in sales of these cars by German brands in particular, since around 80 percent of all diesel vehicles in Germany are made by a German manufacturer. The mix of engine types in 2010 had almost returned to its long-term average. Overall almost 42 percent of all newly registered cars featured a diesel engine. The keeper structure has also changed. The year 2010 was dominated by a massive reduction in registrations by private individuals due to the ending of the subsidies. In 2009, almost 62 percent of all newly registered cars were privately owned, whereas this figure fell to just 43 percent in In contrast to this, business with commercial customers improved. One of the main supports for the German brands was their sales of company cars. Accounting for around 29 percent of all new registrations, this constitutes the second-largest segment after the private market. The company car segment increased by 12 percent to 840,000 units in Most registrations of company cars involved compact class vehicles (26 percent); 23 percent of all company cars are in the mid-class. The upper class, on the other hand, accounted for just 1.5 percent of all new company car registrations. Commercial vehicle market recovery is obvious Diesel segment approaches long-term average in 2010 The German commercial vehicle market found its feet again in The very dramatic development of exports and the increasing demand for transport, which went hand in hand with it, initially meant that customers cars that had been taken off the road were put back on the road. Since early summer, however, the number of new registrations has undergone a major rise. The upwards trend in the commercial vehicle segment was clearly visible in 2010 after the difficult year of crisis. Particularly towards the end of the year, sales of commercial vehicles saw a massive uplift. During the past year, a total of 282,000 units were sold, representing 17 percent more newly registered commercial vehicles in Germany than in Although this meant that sales were still well below their record levels from the earlier boom years, the commercial vehicle industry nevertheless ended the year after the crisis very strongly. The forecasts for both the vans segment and also the heavy goods vehicles segment were beaten by a long way. Orders received for vans increased by 10 percent overall, despite some ups and downs at the start of the year. In the weight class up to 6 metric tons, 16 percent more vehicles were sold in 2010 than the previous year with over 203,000 new registrations in Germany. On the other hand, heavy goods vehicles in the class over 6 metric tons, which had suffered more than most in the crisis, underwent very dynamic development in 2010.

33 33 Since the end of 2009, orders have been on the rise and this was finally expressed in new registration numbers as from June. Over the full year, total orders increased by 72 percent as a result of the fact that they started from such a low base. With around 73,700 units, commercial vehicle sales in 2010 were one-fifth up on the previous year. Although almost 100,000 units were sold in the record year of 2008 in Germany in the heavy class and the level in 2010 was still a long way away from the levels prior to the crisis, large trucks came out of the crisis more quickly than had been anticipated. The positive year-end for the commercial vehicles business clearly demonstrates that the turn has been reached and the upwards trend is stable. Production of commercial vehicles turning point passed Last year the German commercial vehicles industry managed to get back on its feet after the sharp decline in production which occurred in At home German manufacturers managed to increase their production output by 44 percent to 353,600 units. This still meant that they were a long away from the high levels of 2007/2008 when production of commercial vehicles exceeded half a million. Good growth of 50 percent to 605,000 vehicles was also recorded at foreign sites. The global outlook of the manufacturers paid particular dividends in the upcoming threshold countries such as Brazil and China where German groups have local commercial vehicle manufacturing plants. Despite a production rise of 44 percent, previous record numbers not yet exceeded

34 34 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry Van production returns to 10-year trend Vans were the first segment from the commercial vehicle industry to come out of the crisis. The production nadir was reached in the first six months of 2009 and since then, production has returned to an upwards trend, which mirrors the upturn in the economy as a whole. In 2010, a total of 230,700 vans (+38 percent) came off German assembly lines, while foreign production plants operated by German van manufacturers managed to beat their previous year s figures by a massive 46 percent. The main location outside Germany in 2010 was Brazil, where production almost quadrupled to a total of over 100,000 units. In Europe, Spain was the outstanding country with production growth of 27 percent to 42,000 units. Production of trucks over 6 metric tons recovers faster than expected Increasing production of heavy transport vehicles in both domestic and foreign factories Heavy trucks over 6 metric tons were particularly hard hit by the economic and financial crisis with total production in 2009 down to a third of previous levels both within and outside Germany. Last year domestic production increased by 66 percent to 116,000 units. After reducing the stocks that had accumulated during 2009, stocks last year were built up again slightly. The production dynamic increased as the year went on, with production actually doubling in the second half. However, the need to catch up was much greater in this segment than was the case with light commercials. Production in the second half of the year was still a good third below the record levels seen in the first half of Production in overseas plants was also ramped up dramatically during Overall, 61 percent more heavy goods vehicles (311,000) came off the assembly belts than in the previous year. The main locations were Japan (+80 percent), Brazil (+47 percent) and the USA (+77 percent). As a result of its global outlook, the German commercial vehicles industry can react quickly and effectively to market movements and this flexibility is also one of the reasons for its outstanding position among its international rivals. Exports of commercial vehicles rose quickly to a low level The positive development of exports was one of the major factors to helping ensure that German production of commercial vehicles in Germany increased dramatically during The development within the various weight categories differed wildly, however. While the share of exports of vans rose sharply to 72 percent in 2010, the equivalent figure for heavy trucks over 6 metric tons was just 62 percent and therefore hardly more than the level from the previous year. Towards the end of the year, the share of exports in this class rose once again, however, to over 70 percent. Another trend that has been observed is a gradual, albeit slower, return to the structures that dated from before the crisis. Overall, German manufacturers exported 51 percent more vans in 2010 than in the previous year, with the total reaching 165,500 vehicles. This means that they are still more than a quarter below the record value from Exports to America rose particularly strongly and more than doubled during the year. Exports to Eastern Europe also rose by above average rates with the total being 78 percent up on the previous year. The year 2009 saw heavy falls in these exports but the markets have now recovered a little from their lows. German manufacturers of commercial vehicles also managed to increase their exports of heavy trucks by two-thirds to 71,600 units in The main growth region was once again Eastern Europe where sales were three-times higher than in However, in view of the fact that the overall levels are still rather low, it may reasonably be expected that export growth will continue in 2011.

35 35 Trailers and bodies on the road to recovery The trailers and bodies industry managed to withstand what was a historic slump for it, which affected every segment and every manufacturer during As a result of the good economic development in 2010, the first green shoots of recovery were seen in the first year after the crisis and manufacturers were able to recover a little from the severe slump, albeit from a very low level. On the other hand, it will take a little more time for numbers to return to the levels seen between 2006 and The upturn in the transport industry proved a positive one for trailer manufacturers in Although plenty of capacity was still out of action at the start of the year, the following months saw activity increase once again. Capacity once again better exploited Orders started to arrive, leading to better use of existing production capacities. The sale of stocks that began in 2009 and lasted until the first quarter of 2010 meant that production and capacity use increased moderately. Orders for multi-axle trailers, particularly orders received from German customers, once again started to return to the long-term sales trend, although there is still a long way to go to reach the levels from before the crisis. The effects of a high base for semi-trailers distorted the high increase in orders from German and foreign customers during last year, although demand also increased. Vehicle stocks held by forwarding contractors were still relatively new in 2010, but increasing demand for forwarding services nevertheless resulted in an increase in market activity. Rising demand for forwarding meant that initial replacement and expansion investments became necessary, resulting in positive effects for the new vehicle business. Domestic sales of semi-trailers during 2010 rose by 31 percent to over 22,200 units after a rather disappointing start to the year. Nevertheless, the volume remained below the pre-crisis levels of 2008, which exceeded 41,000 units. In 2009 the market then collapsed by around 60 percent. The fall during the crisis for multi-axle trailers was less severe and was moderate by comparison. This also meant that sales of multi-axle trailers rose at a lower rate of 78 percent to a total of 20,800 units.

36 36 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry Developments for Trailers, Bodies and Buses After the shock of the economic downturn in the autumn 0f 2008, the situation for the German commercial vehicle industry, and for the manufacturers of trailers and bodies in particular, has relaxed in 2010 again. The trailer and body manufacturers have thus survived a historic crash for the sector. The commercial vehicle market is a rather cyclical business with greater economic swings than those found in the passenger car sector. It therefore has more in common with the capital goods industry than with the consumer market. German trailer and body manufacturers had the foresight not to forget this during the many years of upturn and thus placed great importance on a high degree of flexibility. In this way, they succeeded in adjusting production in the short term and reducing their stocks, and they were able to retain their core staff as much as possible. Investments in research and development were also maintained at a relatively high level, so the companies would be at the forefront with new products after the downturn. In 2010, some light could be seen at the end of the tunnel thanks to the economic recovery; this meant that the manufacturers could recover financially even if it was only the start of a gradual process. Despite the fact that it will still take time to achieve the production figures of the boom years of 2006 to 2008, the German commercial vehicle industry has proven once again that its companies think strategically while also being exceptionally flexible. Post-crisis turning point for the commercial vehicle industry The German commercial vehicle market regained a foothold in The country s positive export trend and the increasing demand for transport have led to vehicles in the road transport industry that were declared off road during the crisis being recommissioned again. Since early spring 2010, the number of new registrations has also been on the increase, too. At the end of the year, the sales of commercial vehicles made an impressive comeback. In all, 282,000 units were sold in Germany meaning a 17 percent increase in new commercial vehicles in the past year compared to Although sales are still considerably below previous record figures, the commercial vehicle industry came out of the year after the crisis reinforced, with forecasts for the van and heavy vehicle segments being outstripped significantly. The van market developed better in 2010 than initially expected. The weight class up to 6 metric tons recorded a 16 percent increase in sales over the course the year compared to the previous year, thus notching up new registrations to 203,000 vehicles on the domestic market. In contrast, the class for heavy trucks over 6 metric tons, which felt the impact of the crisis far more, developed more dynamically. Since the end of 2009, new orders increased and this trend was also reflected from June 2010 in new registrations. With nearly 73,700 units, commercial vehicle sales were up 20 percent in the year-on-year comparison. Although nearly 100,000 units were sold in the heavy truck class during the record-breaking year of 2008, and the 2010 figures are still a long way off this level, this class negotiated its way out of the crisis more quickly than expected. The positive year-end close for the commercial vehicle industry is a clear indicator that a turning point has been reached and the upwards trend is stable.

37 37 Recovery for the manufacturers of trailers and bodies In 2010, the upturn in the transport sector also had a positive impact on the manufacturers of trailers. At the start of the year, production facilities that had been out of commission were reactivated and the practice of reduced working hours was stopped successively. The sale in stocks made necessary by the crisis was completed during the first half of 2010, whereby production and plant utilization were able to rise moderately. Despite hauler vehicle fleets being relatively young in 2010, the increasing demand for freight transport led to an initial market rejuvenation after the downturn. The increasing demand for transport made replacement and expansion investments necessary, which had a positive effect on new vehicle transactions. Orders of multiple-axle trailers predominantly orders from the domestic market took small steps in 2010 towards the long-term sales trend. In the past year, strong underlying effects distorted the high order increase for semi-trailers from foreign and domestic customers, even though demand increased, too. After a somewhat disappointing start to 2010, domestic sales for semi-trailers increased by 31 percent to 22,000 units. This volume remained considerably below the 2008 figure of more than 41,000 units. The market declined by approximately 59 percent in During the economic crisis, sales for heavy multi-axle trailers did not drop as significantly. In 2010, multi-axle trailer sales increased in a correspondingly muted manner of 7 percent to 20,800 units. In 2010, sales of trucks and trailers on many foreign markets bucked the downwards trend seen by the international commercial vehicle industry triggered by the effects of the global financial and economic crisis. However, the number of new registrations is still at a comparatively low level in many countries. In Western Europe, sales of commercial vehicles recorded a gain of just under 10 percent to reach 1.7 million units. Despite this being 500,000 fewer units than in 2008, the Western European markets continue on their course of stability. In the first six months, demand increased particularly in the van segment. During the course of the year, sales of trucks over 6 metric tons also picked up. In all of 2009, the number of new van registrations was approximately 12 percent higher than the previous year with demand for heavy commercial vehicles increasing by 3 percent. Western European markets recovering, too The Western European trailer market increased by 11 percent in a year-on-year comparison, whereas the number of registrations in the previous year had collapsed to less than half of the year before. In many of the countries, the road to recovery took differing routes. While double-digit growth was recorded by Germany and Britain in particular, the trailer business in France and the Netherlands was weak. Particularly popular were refrigerated, tank and construction-site trucks, while curtainsiders and container chassis suffered losses. Increasing registration numbers for heavy trailers are expected again for the coming year, even though market growth will be far more moderate in comparison to the boom years of 2006 to However, it is to be expected that trailer fleets will be increasing in size in the coming years across Western Europe.

38 38 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry A detailed determination of market size and market share remains possible only on a limited basis With the national implementation of the 2007/46/EC guideline (EU uniform approval of vehicles and trailers), the corresponding type approvals for new vehicle models have been issued on a selective basis since the end of April On the other hand, a result of these type approvals is that coding based on new, less-specific EU classifications have been introduced for vehicle as well as body classes in the truck, bus and trailer segments, which means that for vehicles transporting goods it is only possible to distinguish trucks, vans, semi-truck and tractor trucks, and for trailers to distinguish between semis and draw bar, center-axle and travel trailers. There has been a substantial reduction in information from German registration statistics since April 2009, due to the sharply reduced range of the EU classifications compared to the national system of the Federal Office for Motor Transport (KBA). There is indeed a correct reflection of the totals for registered vehicles in the truck, van, semi-truck or tractor truck segments as well as for semi, draw-bar, centre-axle and travel trailers. Statements about gross vehicle weight and manufacturers continue to be possible as well, as far as the total number of vehicles is concerned. On the other hand, only subsets of actually registered vehicles are represented, based on body type, such as insulating tanker, closed-box and long-material bodies, as well as dump trucks and these vehicles have indeed been the ones coded under the older type approvals. Given the high relevance of detailed data for the determination of market volume and share in individual vehicle segments and body categories, the VDA is now in an intensive dialogue with the Federal Office for Motor Transport (KBA) and the EU Commission. Hence, in 2009, the KBA introduced a suggestion developed by VDA manufacturers for a modified classification of vehicle classes and body types to a TCMV working group. The discussion about the guideline for EU type approval has now been concluded in the member states, such that the KBA is planning to publish detailed registration statistics during the course of 2011 once more. German trailer and body manufacturers with a revenue plus Within the industry, it was the manufacturers of trailers and bodies who suffered the most at the hands of the economic downturn. In 2009, revenue fell by 46 percent, with last year s recovery revenue growth of almost 20 percent to 6.54 billion euros in total doing little to change the dramatic situation. This still represents a gap of 36 percent to match the record of billion euros set in Nonetheless, the trend reversal has also reached the trailer and body sector, too, with revenue increasing in the fourth quarter of 2010 alone by more than a third. Domestic business, which accounted for the largest share with 56 percent, increased by 14 percent in 2010 to 3.69 billion euros and was able to record a positive development once more. Here, growth of around 30 percent was recorded in the closing quarter of However, it is still a long way off the early record levels: in 2008, the industry achieved domestic revenue of 5.3 billion euros. Foreign business increased by a solid 28 percent to 2.85 billion euros in 2010 and accounted for 44 percent of total revenue. But in 2007, companies earned more than half of the revenue abroad.

39 39 While numerous foreign trailer and body manufacturers had to shut down production, German manufacturers adjusted their capacity early during the years of the crisis. At the same time they did everything they could to manage the crisis with the resources available to them namely a reduction in working hours accounts, extended factory breaks, the release of contract and temporary workers and reduced working hours. Nonetheless, the companies were forced to steer their production by sight and moderately reduce staff. As a result, they also had to reduce total employment in 2010 by 9 percent to 28,000. This must definitely be seen as a success in comparison with the dramatic fall in revenue. The industry, which had continuously ramped up staffing levels since 2004, still employed 800 more workers, an increase of 3 percent, than it did five years earlier. Employment remains relatively stable in crisis periods The improved control of short-time workers has accounted for the fact that the companies have been able to retain their core employees for the most part, so they can now expand their leading global positions with the help of their specialized, skilled workforce after the downturn. Now the German and European markets are recovering, this will have a positive, stabilizing effect on employees.

40 40 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry German bus makers manufacture global success The global markets for busses have proven to be comparatively stable during the crisis. And this trend will likely be less affected from strong fluctuations in future either. In 2009, global sales for buses over 8 metric tons only fell by 11 percent to approximately 250,000 units. In comparison, sales of heavy trucks over 6 metric tons plummeted by twice as much. The year 2010 recorded a small increase in bus global sales, but considerably more growth with heavy trucks. And in 2011, the number of new bus registrations will increase moderately across the world. By 2013, the world market with grow about 3 percent beyond 2010 levels. But the individual global regions exhibit different trends. In Western Europe, the 2009 drop in sales of buses over 3.5 tons to 35,000 units (-12 percent) was lower than the world trend. Traditionally, the sales figures for buses follow those for heavy trucks with a certain time lag so that the crisis will show its effect at a later stage. Hence, the Western European bus market fell by 9 percent to 32,300 units in Western Europe accounts for just under a tenth of the global bus market, with a falling longterm tendency. For the whole of 2011, slight pan-european growth is expected, but it should take several years before the pre-crisis level is reached. Nine out of ten German brand buses are built abroad The most important market for busses over 8 tons is undoubtedly China. In 2011, approx. 100,000 units will be sold. The pre-crisis level of 2008 was reached in It is expected that China will continue to grow and affirm its dominance, although growth rates will no longer be as high as before. In the Americas, Brazil is the largest market for buses over 8 tons. With 28,400 units, the nation has already surpassed Western Europe (23,300). German manufacturers now produce on a global scale with nearly 9 out of 10 buses being built abroad. In 2010, 69,700 units were manufactured at foreign production sites. In the growth markets of India, China and Brazil, German bus manufacturers are wellpositioned thanks to cooperative agreements and stakeholdings. Henceforth, they will continue to play a major role in the expected 2011 sales growth in these countries. German omnibus market somewhat weaker in 2010 the exception being coaches On the German market, the number of new omnibus registrations (5,200 units) fell below the previous year s result by 7 percent. Domestic omnibus production fell in 2010 by 11 percent to 7,000 units. The increase in production of 18 percent for tourist coaches and intercity buses (3,000 vehicles) was not able to compensate for the drops of 32 percent for urban buses (2,200 units) and 12 percent for chassis (1,800 vehicles). Here, the discontinued stimulus program has played a key role as has the re-flourishing tourism sector for coaches. Exports of 5,000 buses were down by 15 percent in the year-on-year comparison. The most important recipient country was France with 1,140 vehicles (± 10 percent) ahead of Italy with 550 units (+39 percent) and Austria 415 busses (+52 percent).

41 41 Markets for recreational vehicles expanding again in 2010 In contrast to the dwindling demand triggered by the downturn in 2008, sales of motor homes and caravans have improved, even though the number of new recreational vehicle registrations was decreasing in 2010: 33,700 new recreational vehicles were registered in Germany, a decrease of nearly 2 percent compared to A drop of just under 7 percent was recorded for new caravans with 15,600 being registered compared to 16,700 in the previous year. In contrast, new motor home registrations increased by 3 percent to 18,100 units in the year-on-year comparison. For the current year, the industry is expecting consolidation on the caravan markets and a continuation of the growth recorded in the motor home sector. The European market for recreational vehicles also ended the past year with a slight dip in registration numbers. Overall, 150,000 recreational vehicles took to the road for the first time a drop of 3 percent. However, there are major differences between countries and vehicle categories. A figure of 68,000 vehicles meant an increase of 1 percent for new motor home registrations. However, the sales of travel trailers fell by 6 percent to 82,000 units compared to the previous year. The caravan markets in Norway, Sweden, Finland, Austria and Switzerland were able to notch up increases. Conversely, the number of new registrations sank in almost all other European countries. The slight increase in new motor homes can be mainly attributed to countries such as France, Germany, Sweden and Norway. However, Italy and Britain had to bear considerable drops in sales to some extent. After the decrease in the production of recreational vehicles in 2009, the past year had signs pointing towards a fundamental upwards trend. Both the manufacturers of motor homes and makers of travel trailers have been able to increase production. A total of 40,500 caravans (+6.3 percent) and 30,900 motor homes (+35 percent) rolled off the production lines of German recreational vehicle manufacturers. Production and export of motor homes and travel trailers picking up again The German motor home and travel trailer industry was able to re-stimulate business in Overall revenues were just under 12 percent above the results for 2009 climbing to 4.5 billion euros, with revenues for new vehicles climbing by 24 percent to 2.3 billion euros and for accessories by 9 percent to reach 470 million euros. On the other hand, the market for used recreational vehicles shrank by nearly 3 percent to 1.8 billion euros. The outlook for the current year is positive once again just as it is for other industries. After the consolidation of the German market, the industry can look forward to continued stabilization in 2011 with motor home sales expecting to record slight growth. The sales for travel trailers are projected to remain at a similar level to the previous year. The heavily reduced stocks at dealerships should contribute towards the German manufacturers and suppliers expecting light increases in production figures. In terms of export, the forecasts for the motor home business are far better than for caravans. As a whole, stable recreational vehicle markets are forecast for Europe. The manufacturers are also optimistic with regard to the number of employees. One third of German recreational vehicle manufacturers are forecasting the expansion of the workforce in The situation appears to be similar for trainee positions: 31 percent of manufacturers want to hire more trainees. Stable markets and rising employment expected for recreational vehicles

42 42 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry State of the Market for Automotive Suppliers Upswing after crisis The production of motor vehicles increased more than originally expected in The suppliers have been able to exploit this very dynamic development of their German clients in Germany, and abroad in particular, by increasing their own capacity utilization and increasing head counts during the course of the year. The majority of German automotive suppliers were in the red in 2009 with a corresponding reduction in assets. Since the second half of 2009, the situation has relaxed considerably. According to the IKB, revenue as good as reached the same level as prior to the crisis during the second quarter of For the second half of 2010 and for 2011, it can be assumed, according to the IKB, that this recovery trend will continue albeit with reduced dynamic. Financial situation relaxed ratings improved Rating from agencies have bottomed out and are improving The financial market crisis that began to bite in the autumn of 2008 triggered the restrictive money lending policy that financial institutions pursued. This lead to both investment and financing bottlenecks for the affected companies. The first recovery tendencies could be seen from the middle of However, each sector is experiencing this positive development differently. Sales turnover and workforce suppliers Klaus Deller, Board Member, Knorr-Bremse AG (Chairman of the Manufacturer Group III Committee for Sales Issues) 7,000 6,500 6, The Committee for Sales Issues deals with current, fundamental topics in collaboration with automotive manufacturers. It has established itself as a source of information for suppliers and promotes everyday commerce with our customers, both national and international. 5,500 5,000 4,500 4, , , Turnover Workforce Source: IFEU

43 43 To shed some light on the current situation faced by the automotive supplier industry, the VDA in conjunction with the national rating agency PSR Rating carried out a quick survey focusing on financing and capacity problems in October Companies in the automotive industry have seen a restrained easing in the restrictive lending policies of financial institutions. For the most part, the ratings for companies have bottomed out; additional rating downgrading is only expected in exceptional cases. Given the current situation, companies in the sector are expecting an improvement in the assessment of economic stability during the course of the year after the drastic ratings at the start of the financial market crisis. Suppliers delivering innovations Competitive pressure on suppliers are improving A major contribution in developing innovations for cars of German corporate brands comes from their supplier companies, the majority of which are German, too. This means that the suppliers have a good chance to perform better in the global selection process than their foreign competitors. This is especially true if companies retain their level of investment in development or even increase it in some instances. At the same time, innovations are crucial in helping to develop even more sustainable mobility. Low-consumption drive technologies continue to be the most popular technology trend. Suppliers spotted this trend at an early stage and together with the manufacturers rely on a multi-discipline strategy that encompasses every type of efficient drive from optimized gasoline and diesel engines to hybrid drives and fuel cells through to the electric car. This path is being chosen by the suppliers for in-house developments as well as for cooperation agreements and strategic alliances. It is still too early to forecast which drive concept will ultimately prevail. German companies are thus best advised to embrace every technology in order to be represented in the leading group and/or be its pioneer. Prof. Dr. Peter Gutzmer, Deputy Chairman and Managing Director of Technical Product Development Schaeffler Automotive (Chairman of the Committee for Development Leaders among Suppliers) The Committee for Development Leaders has set itself the goal of increasing development efficiency. This extends to internal development processes among suppliers, interaction with manufacturers, and looking at the whole process as part of the value-creation chain. Pre-competitive standardisation is a tool on the road to achieving this goal.

44 44 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry Consolidation in the supplier sector cutting back capacity or continuation? In the Money vs. Technology study published by the VDA, 75 percent of the supplier companies surveyed expect consolidation in the coming years. The companies objective just as it is for foreign companies is thus to secure knowledge and expertise while creating access to growth markets, particularly through the acquisition of financially weak suppliers. Consolidation opportunities not exploited so far A consolidation strategy is important for German suppliers in order to create alliances to better withstand the price pressure from manufacturers and to be able to supply customers with package solutions. However, these strategic measures tend to be more the exception than the rule. Even during the critical year of 2009, opportunities for consolidation and adapting capacity were not exploited. Small family-run companies often do not have the necessary financial power to acquire competitors also due to the reduced equity ratio. It can be assumed that consolidation will gain momentum thanks to cooperation trends between manufacturers and platform strategies. Suitable acquisition candidates are energy- and raw-material-intensive familyrun companies, even for Asian competitors. Globalization as success factor raw material prices as the new challenge German suppliers are represented across the globe with 2,000 production sites. This global arrangement will be a competitive factor of increasing importance as the weighting on the global automotive market changes at high speed. China and India are playing a particularly key role in the battle of the automotive regions alongside Russia and the USA. This is where the two-pillar strategy of export and production abroad, as pursued by German manufacturers, pays off. So, the German automotive industry has been able to weather the crisis more quickly thanks to this strategy in conjunction with attractive models, top quality and technological innovations and more quickly than some competitors. The VDA supports member companies with their globalization strategy in the form of joint stands at trade fairs. Global price trend of raw materials placing a strain on value chain Rising energy and raw material prices have been taking their toll on companies. Therefore, they must seek savings opportunities and be highly energy efficient. Iron ore and steel, to name just two examples, have recently increased in price dramatically. The pressure on small to medium-sized companies that process metals, rubber, plastics or paints will increase, with their margins coming under increasing pressure. The Principles for material price compensation formulated by the VDA Raw Materials Committee contribute to the fact that cost increases will not remain alone at the lower stages of the value added chain. It is possible, albeit to a limited extent, to counteract the material prices using purchasing cooperations. Members of the VDA can also find technical support via the digital cooperation portal; incidentally, the network of member companies offers a variety of approaches. Dr. Francisco J. Garcia Sanz, Board Member for the Procurement Division, Volkswagen AG (Chairman of the Raw Materials Committee) The Raw Materials Committee is the governing council for relations among OEM and suppliers in Germany; it embodies the shared roof that distinguishes our association from organizations in other countries.

45 45 VDA as a mutual platform for solving problems The VDA represents the interests of all of the German automotive industry so both those of the vehicle manufacturers and of the suppliers alike. This set-up means the VDA has a unique feature on the international stage: a multitude of complex circumstances arising from the manufacturer/supplier relationship can be discussed under the umbrella of the VDA and a solution provided. Long-term partnerships serve the purpose of achieving mutual market goals better than short-term market forces. The automotive industry s success model is a strategic partnership that will allow the German automotive industry to improve price/performance ratios and be an innovative leader. The Manufacturer Group III in the VDA (Vehicle Parts and Accessories) has approximately 500 members. Almost all of these direct suppliers of vehicle manufacturers, particularly system and module suppliers, are affiliated with the VDA. Furthermore, a high percentage of 2nd- and 3rd-tier suppliers exploit the benefits provided by membership to the VDA. Apart from the flow of information about economic, structural and technical developments within the industry, it is the possibility of close cooperation with vehicle manufacturers that makes the VDA an attractive option. This is reflected in a series of committees and working groups, in which both manufacturing groups, i.e., car manufacturers and suppliers alike, are represented. Suppliers represent the biggest group of members in the VDA The VDA medium-sized business sector In Manufacturer Group III, more than 80 percent of the companies are small- to medium-sized enterprises, while in Manufacturer Group II (trailers, bodies and buses), almost all companies are. Nearly half of all supplier companies in the VDA employ up to 250 staff; four out of five companies fall into the category of up to 1,000 members of staff. Most of these companies are family-owned or have the structures of an owner-run enterprise. According to recent estimates from Institut für Mittelstandsforschung (the institute for small-business research) based in Bonn, large family-run companies with one seventh of all employees account for one fifth of total revenues from all German companies. The VDA makes allowances for this fact by facilitating a working group specifically for these companies: the VDA medium-sized business sector. This working group focuses solely on the needs of medium-sized suppliers and trailer, body and bus manufacturers and offers these members a number of activities. The goal of the working group for medium-sized business sector companies is to further highlight the interests of these companies in the association s work. Its main remit is to represent interests both within the automotive value added chain, focusing on the supplier industry, and externally, with regard to the world of politics, banks and other institutions. The highlight of the medium-sized business sector working group s work is its symposium held annually for SMEs in the VDA. Every year up to 200 executives from all fields of the automotive industry come together with illustrious representatives from the worlds of politics and science to form the perfect platform for exchanging information and discussion. The 11th VDA medium-sized business day held in May 2011 had the motto Upturn on new markets upturn for SMEs? Where management meets the worlds of politics and science Arndt G. Kirchhoff, Managing Director KIRCHHOFF Automotive GmbH (VDA Group for Medium-sized Companies (Mittelstand)) Medium-sized companies need their own platforms to define and discuss topics relevant to them: the Group and annual VDA conference for medium-sized companies are ideal venues. Healthy medium-sized companies are an indispensible part of our industry s overall competitive strength.

46 46 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry The highest representative body of the supplier industry within the VDA is the Manufacturer Group Assembly, which coincides with the General Assembly of VDA members every two years. As part of the general assembly of members, the Manufacturer Group elects 45 representatives to the Advisory Board of Manufacturer Group III; the elected representatives of the supplier industry automatically belong to the VDA s managing board. The Advisory Board also defines the strategy for the association s work. Protecting knowledge support in the face of white-collar crime Warranty processes orientation aid for the automotive industry As part of the responsibilities of the VDA Medium-Sized Business Working Group, the VDA informs member companies about the risks of white-collar crime and suitable preventative measures. Small to medium-sized companies are more under threat than generally assumed. Frequently, it is a company s own employees who unwittingly represent the largest area of weakness. Suppliers can obtain support through the VDA from the federal constitution agency (Verfassungsschutz) or professional service providers to prevent fraud or espionage, or in the event of such suspected cases. The VDA Raw Materials Committee with board representatives from the manufacturer and supplier side has established a project group with the support from the Committee for Marketing Questions of Manufacturer Group III, which focuses on current issues relating to warranty agreements and processes. The project group has drawn up an orientation aid for VDA members, which is illustrated with examples compiling discussion topics from the project group and depicting the weaknesses and strengths of processes. The orientation aids and examples are made available to interested companies by request. Legal aspects of warranty agreements are not discussed; existing agreements remain unaffected. VDA pension management Company pensions are gaining in importance as a staff-retention instrument. Company pensions offer employees and employers benefits, if these are tailored to suit the company s circumstances. With its pension management scheme, the VDA is providing the automotive companies with an innovative solution for company pensions. A unique complete package has been drawn up exclusively for VDA members in conjunction with The Pension Consultancy GmbH (TPC), Hamburg, a specialist in comprehensive company pensions. Comprehensive offer for employers and employees for investing for retirement The VDA pension management scheme provides a comprehensive service package comprising consultation, implementation and support in relation to all issues surrounding company pension schemes. The package has been tailored specifically to match the needs of companies in the automotive sector and their employees. Customized solutions are available for all employee types, from managing director and executive to the broad workforce. It covers the key provision fields with building blocks for health care (prevention models), disability, retirement provisions and survivor s insurance as well as models for flexible design of fair value and lifetime working time accounts. As an industry solution, VDA Pension Management also offers the best possible benefits and terms through a group contract. Furthermore, should the employee change employers, transferability (portability) to another employer is simplified with this solution. These are the right arguments to make an employer even more attractive and, for example, to score points in acquiring sought-after specialized staff or executives or cementing ties with them. Detailed information about VDA Pension Management is available at

47 47 Working on the future: young entrepreneurs in the VDA Three years ago, the VDA Young Entrepreneur Group was established at the suggestion of the medium-sized group. It meets twice a year to discuss current issues and to allow fresh ideas to flow into the work of the VDA. At their last meeting, the young entrepreneurs discussed the future of the automotive value added chain, the growth market of China and working professionally with the media. If you are interested in being involved with the young entrepreneurs, please contact Helmut Weirich, weirich@vda.de, at the VDA head office. VDA databases The German automotive industry is looking to the future with its innovations. Topics such as environmental protection, reducing consumption and CO 2 emissions, electro mobility, new mobility concepts and lightweight design mean that automotive manufacturers and their suppliers are faced with considerable responsibilities. Suppliers provide up to 75 percent of the value creation in the automotive industry. Technical and structural innovations continue to be a key strategic subject. It is not without reason that we talk of a development partnership: manufacturers need competent suppliers and vice versa. The VDA has established the Internet platforms and specifically to support supplier companies with their activities within the automotive value added chain. These programs, largely usable without an access code, are also in English and thus available for international users and offer the possibility to locate cooperation partners.

48 48 Facts, F i g u r e s a n d Data a b o ut th e G e r m a n A uto m oti v e I n d u stry The Herstellernachweis (VDA Directory of the Automotive Industry) is a database in which VDA member companies can input company information and their range of products, classified according to a special product key. Users of the directory can conduct a detailed search for a company, product or region to obtain accurate information, and can contact the relevant person in the required company directly via . Broadly based database with international participation auto-world, a broadly based automotive database for Germany, was developed by networking the Directory of the Automotive Industry with the databases of German automotive initiatives. Foreign organizations are also connected to it; one example is a database for the Netherlands and Belgium. VDA AutoCooperations is an Internet platform with news, events, literature, service providers, links and checklists on cooperation in the auto industry. A distinctive feature of AutoCooperations is that it contains an electronic marketplace (cooperation exchange) in German and English, in which the submitted requests for cooperation are matched and connected with the offers from other firms. VDA rating tool: new version available Since 2003, the VDA rating tool has established itself as an analysis instrument for the qualitative and quantitative positioning of companies. In addition, the balance sheet component of the tool is recognized by customers in the automotive industry as evidence of creditworthiness. This year, the VDA is offering member companies a new version of the VDA rating tool via its cooperation partner PSR Rating GmbH, Tübingen. Key benefits of the new version include: up-to-date benchmark figures for comparison with the automotive industry data recording via complete (full balance sheet) or compact (part balance sheet) input screen improved export options for creating internal and external reports automated web-based updates for the VDA rating tool in the event of changes

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51 General Conditions of the Automotive Industry Christina Hundsdorfer technical draughtswoman, designer powertrain/chassis, Bertrandt Group, Ingolstadt

52 52 G e n e r a l C o n d iti o n s o f th e A uto m oti v e I n d u stry The Transport Policies of the EU and the German Government The influence of the EU on transport policy The EU is now the driving force behind legislation for the motor industry and transport The European Union is now responsible for the vast majority of the laws that currently affect the motor industry. These primarily include the CO 2 legislation, the Euro standards relating to emissions, laws to increase road safety and the EU homologation process. The trade policy, which also governs the motor industry that is exposed to global competition, is also driven primarily by the European Commission. The WTO trade deals and the Free Trade Convention with third-party countries are negotiated by the European Commission, as is the process to increase transatlantic cooperation negotiated by the Transatlantic Economic Council (TEC). In addition, Europe also produces a whole range of general initiatives. The 2020 strategy contains initiatives, which are designed to improve the competitiveness of European industry, while the Roadmap 2050 is an attempt to outline the route to a decarbonized industry and the Transport Policy White Paper is a guideline to transport in Europe up to The Cars 21 process is particularly important to the motor industry. This is a platform on which representatives of the European Commission, member countries and the motor industry (manufacturers and suppliers), as well as other industries related to the sector such as the mineral oil industry and the transport industry, discuss the future of the sector. The focus of these discussions is measures designed to improve the competitiveness of the motor industry. How can everybody concerned help with certain measures such as CO 2 reductions to achieve as coherent and effective a result as possible ( integrated approach )? How can laws be better prepared so that the negative effects for the motor industry can be ruled out completely in the perfect case? Should a type of roadmap of legislation be created for the long term to achieve a greater degree of planning certainty? These are just some of the questions that are under discussion at the highest level in this Cars 21 Group. The reform of the New European Driving Cycle (NEDC) The European emissions measurement cycle is to be replaced by a global regulation A new emissions test cycle for cars is currently being developed in the form of the WLTP (Worldwide Uniform Light Duty Test Procedure). This will be used globally and will therefore replace the NEDC (New European Driving Cycle), which has been in use in Europe since the nineties. The aim of this cycle is to provide a representative test for driving a vehicle. The cycle should form the basis for assessing the pollutants and CO 2 emissions of a vehicle as well as its fuel consumption. The new driving cycle generation will be created using a stringent scheme that is based on driving data recorded around the world and which should therefore provide a representative pattern of the actual driving properties of a vehicle. The creation process is globally accepted and is being conducted by the UN/ECE. The driving data acquisition process is due to be completed by the end of March, which means that a version of the test cycle based on these data can then by created. In addition to developing the cycle, the question of the test procedure in the laboratory and on the test beds also plays a major role. Groups of experts are working on the measuring procedures and the definition of the marginal conditions so as to produce stable, reproducible measurement results. Special attention has been given to new technologies in the creation of the process. For example, the measurement procedure will also take account of the special features of electric vehicles.

53 53 The new cycle is designed to represent the CO 2 emissions and fuel consumption of a motor vehicle. The experts expect that the consumption figures produced in the WLTP will exceed those of the NEDC. This means that it will also be necessary to adjust the CO 2 target figures. In fact, this is not only a demand by the motor industry, but has also been recognized and accepted by the European Commission s Directorate General for Climate Action. EU white paper on transport forwards to the past? The EU Commission submitted its latest white paper on transport policy in spring 2011, setting out the framework for the period from 2011 to It appears that the document is an attempt to change the basis for transport policy by turning away from the principle of co-modality. In the mid-term review issued in 2006, the commission introduced the principle of co-modality, which is based on the equivalence of all means of transport and therefore provides for the improvement of all modes of transport individually and in combination. This guiding principle has now been replaced by a modal shift concept, which, for example, specifies relocation targets from road to rail for transporting goods over distances of 300 kilometers or more. Plans for forcing traffic on to railways miss the point of logistic needs However, these specifications for market results must be regarded on a highly critical basis, given the fact that they use the principle of planned economy. Although the strength of railways is long-distance journeys, the principle of specifying relocation targets ignores the fact that the market shares of the various modes of transport (including those for long-distance goods transport) result from the highly complex transport mode selection decisions taken by shipment companies. A policy of this nature therefore runs the risk of ignoring the logistics needs of industry.

54 54 G e n e r a l C o n d iti o n s o f th e A uto m oti v e I n d u stry Support for electromobility The German motor industry is investing ten to twelve billion Euros in the development of alternative engine types over the next three to four years The age of electromobility has dawned. The German motor industry is investing ten to twelve billion Euros in the development of alternative engine types over the next three to four years. This represents 40 percent of all R&D costs for engine technology. This is in the face of an expected turnover share of just 5 percent for electric and hybrid cars. The industry is therefore spending a great deal on its preparations. The NPE has defined research and development projects with a total volume of around 4 billion Euros by the year Now what is needed is for politicians to use the instruments for supporting this research to the full. Germany needs a competitive battery and cell production industry The battery is one of the key components of electromobility. For Germany, as an industrial location, it is of strategic importance to establish a battery and cell production industry that can compete on a global basis so as to ensure that the value-added process and technology competence remain in Germany. Intelligent support for research, development and industrialization (including for pilot production plants) is just as important in this respect as improving the electrochemical situation at universities. Electric cars are currently more expensive to buy than comparable conventional vehicles since the additional cost of the electric energy accumulator (battery) considerably outweighs the savings from the elimination of the conventional engine components. These higher purchase costs are also only partly compensated by lower energy costs. In the medium term, the additional total cost of ownership (TCO) for an initial usage period of four years will continue to be a significant four-figure sum. Establishment of the lead market must be accompanied by suitable conditions The establishment of the lead market with one million electric vehicles by 2020 must therefore be accompanied by suitable conditions. These will decide where investments are worthwhile and where the markets for electromobility will be created. Companies and customers must have sufficient confidence to plan and this once again means that the politicians must come into play. The National Electromobility Platform (NPE) is drawing up a list of action to support the successful ramp up of the market. This list will comprise a range of different instruments including financial and fiscal incentives, adjustments to traffic law and infrastructural requirements. The whole range of instruments, consisting of R&D support, investment support and subsidies, must take account of what is happening in other European countries and beyond. Only then will Germany be able to achieve the targets it has set itself. The goods transport action plan greater efficiency for the transport system The current German government has revised the goods transport and logistics master plan created by the previous government. Officially this master plan is designed to be a strategic concept for the future direction of transporting goods and the efficiency of this process. In fact the plan is ultimately aimed at avoiding and relocating transport, making it more expensive.

55 55 The German government has taken into account the reservations of industry and transport federations against this process and has issued a new goods transport and logistics action plan. This expressly acknowledges the importance of transporting goods to industry and wealth, and is an attempt to create positive conditions for transporting these goods. In its new form, the plan contains a number of measures designed to increase the efficiency of our transport system. One of the measures in the action, which could be extremely effective in this respect, is the start of a field test using mega-trucks. Tax policy new direction The focus of current tax policy is the implementation of the fiscal targets set out in the coalition agreements between the CDU, CSU and FDP for the 17th legislature period. A range of measures were quickly implemented, including the corrections to the company taxation reform 2008 and the taxation of year-old car discounts to motor industry employees. On the other hand, a number of important reforms have not yet been implemented. As far as the motor industry is concerned, it would like to see further changes to company taxation (particularly the abolition of trade tax), and above all the simplification of company car taxation. Overall the direction taken by tax policy has undergone a complete change. It has been recognized that there is no scope at the current time for large tax reduction programs. This means that tax simplification has become the new focal point. However, in view of the enormous complexity of the taxation system and the bureaucracy that goes hand in hand with it, it is hoped that a tax simplification package will be created that truly deserves the name. Environmental zones focusing purely on road traffic is unjustified The particulate concentration in the air is heavily dependent on weather conditions. High-pressure weather systems during the winter often create an atmosphere with a high particulate concentration. These excesses are not just limited to conurbations but affect the whole country. In addition there is increased pollution from household wood burning systems. These emissions now create more particulate pollution that the emissions from diesel-engine motor vehicles. This example shows that environmental zones can only be effective if every sector contributes to them. It is remarkable in this respect that, in around ten years, total emissions from engines will not even equal the volume of emissions from all cigarette smoke in Germany. Wood-burning systems create more particulate pollution than road traffic Furthermore, the long-distance transport of particulates is another important factor. According to the German government s model calculation of average annual particulate concentrations (PM 10), this accounts for up to 10 µg/m³ in the central and southern regions of Germany and around 15 µg/m³ in western and eastern regions. In some cities, such as Berlin, the contribution of long-distance transport may be even higher, and in some cases accounts for half of all particulate concentrations.

56 56 G e n e r a l C o n d iti o n s o f th e A uto m oti v e I n d u stry Environmental zones Since 2007, local authorities have been able to establish environmental zones under the Vehicle Identification Regulation and air-quality legislation, and thus prevent certain vehicles from entering town centers. More than 40 of these zones have already been established throughout Germany with the aim of reducing particulate pollution. Originally environmental zones were created to act as an instrument to comply with the limit values for particulates that came into effect throughout Europe on January 1, 2005, comprising average annual values of 40 µg/m³ and average daily values of 50 µg/m³ with a maximum of 35 values above these averages permitted in any one year. In addition, environmental zones were also designed to ensure that levels of nitrogen oxides fell below the limit values. Since January 1, 2010 these have comprised an average annual value of 40 µg/m³ with an hourly limit value of 200 µg/m³, with 18 cases of excess values per year being tolerated. Motor vehicles can only drive into environmental zones if they bear an appropriate sticker. Exceptions include ambulances, vehicles for disabled people and motorcycles. However, there are no standard nationwide regulations relating to exceptions. The periods when vehicles bearing red or yellow particulate stickers can drive into environmental zones also differ from town to town. A national standardization process is therefore urgently required.

57 57 The first results from environmental zones confirm that there has been a reduction in particulate levels brought about by the measures to restrict traffic, but only to a very limited extent of around 3 percent, with large fluctuations also being possible. There have also been comparatively small improvements in air quality in terms of nitrogen dioxide. In Cologne, for example, the introduction of the environmental zone produced a drop in the average pollution of nitrogen dioxide (NO 2 ) at six busy traffic measurement stations in 2007 and 2008 of 1.2 µg/m³, which is greater than the fall in urban background pollution of just 0.5 µg/m³. This corresponds to an average drop of 1.5 percent. In Berlin it was discovered that the nitrogen dioxide concentration had fallen by around 7 to 10 percent. The results from towns in the Ruhr area, Hanover and Stuttgart also underline the low reductions in NO 2 levels in environmental zones compared to towns and cities that do not have environmental zones. The average reduction of particulates in environmental zones is just three percent A scientifically based study and evaluation of the efficacy of environmental zones is due to be completed before the end of It is hoped that this will lead to an objective discussion as to the usefulness of environmental zones. One interesting phenomenon that has come about over the last few years has been the slightly rising annual average values for ozone concentrations. The German Federal Department of the Environment found that this is due to the low quantity of nitrogen monoxide emitted by road traffic. This reduces ozone during the night. Since the improvements in the emissions situation means that the source of nitrogen monoxide form traffic has essentially been reduced to zero, but natural emissions from forests and parks are essentially constant, the annual average value is rising slightly. However, these values are well below being relevant to human health and the well-being of the environment. The high ozone concentrations at the start of the nineties, which in some cases even led to traffic bans, have now long been assigned to the past due to the efforts of the motor industry. Peak ozone concentrations today are no longer relevant and are determined primarily by the duration and intensity of sunshine during the summer. Ozone concentration is no longer influenced by motor vehicles Number of days with ozone concentrations above 180 µg/m 3 in the years 1990 to 2010 in days Source: UBA

58 58 G e n e r a l C o n d iti o n s o f th e A uto m oti v e I n d u stry CO 2 Regulation for Vehicles in the EU Regulation for light commercial vehicles is passed EU adopts graduated plan for the regulation of CO 2 emitted by transporters to 2020 Following the CO 2 regulation for passenger cars passed in 2009, the EU has also passed a regulation for the segment of light commercial vehicles (up to 3.5 metric ton, technically designated as N1 ) in spring The regulation for passenger cars and the one for light commercial vehicles both follow the same basic principles: Weight-based approach: the individual CO 2 limit value of a vehicle is based on its weight. Added together, these individual limit values give a fleet limit value for the manufacturer concerned. From these fleet limit values, the CO 2 limit value is calculated for the whole of the EU. For passenger cars, all manufacturers and importers together have to get down to 130 g CO 2 /km in A target of 95 g CO 2 /km has been set for For light commercial vehicles, the institutions of the EU have agreed on 175 g CO 2 /km in 2015 and 147 g CO 2 /km in Phasing-in: these CO 2 limit values for passenger cars and light commercial vehicles provide for phasing-in. This means that the limit value does not have to be reached by the whole fleet in the first year, but by a rising percentage of vehicles: Passenger cars: inclusion of 65 percent of the fleet of new cars from 2012, 75 percent from 2013, 80 percent in 2014 and finally 100 percent from Light commercial vehicles: the limit value has to be met by 70 percent of the fleet from 2014, by 75 percent from 2015, by 80 percent from 2016 and by 100 percent from CO 2 regulation for vehicles in the EU CO 2 regulation 2009: Cars 2011: Light commercial vehicles In preparation: Heavy goods vehicles Source: VDA

59 59 These transitional periods are intended to allow for the typical product life cycles. Eco-innovations: all technical measures that cannot be measured on a test bed are credited to the average value of the fleet, to a maximum of 7 g CO 2 /km. Sanction payments: from the time when the regulation comes into force, a manufacturer must pay 5 Euros per registered vehicle for the first gram in excess of the target value, 15 Euros for the second gram, 25 Euros for the third and 95 Euros from the fourth and any subsequent grams. This legislation regulates a large proportion of the new vehicles coming onto the market from 2012 (passenger cars) and from 2015 (light commercial vehicles). This gives security to manufacturers and suppliers of the automotive industry, on the one hand, and to customers on the other. At the same time, it means that the European Union now has the most stringent CO 2 targets worldwide. EU adopts the most stringent CO 2 standards for vehicles worldwide The German automotive industry was already on the right path regarding the reduction of consumption before the regulations on CO 2 were brought in. This is confirmed by numerous studies. Thus, for instance, the most recent study by Transport & Environment (T&E), the European umbrella organization of the environmental associations, shows that the CO 2 emissions of passenger cars registered in Europe in 2009 decreased by an average of 5.1 percent compared to the previous year. This is the greatest year-over-year decrease since CO 2 surveillance was introduced in 2000.

60 60 G e n e r a l C o n d iti o n s o f th e A uto m oti v e I n d u stry However, instead of acknowledging these figures as the result of consistent technological improvement and as progress towards climate protection, the CO 2 target values already set for 2012 are repeatedly called into question. These values might so the argument goes be achieved earlier and are thus simply not ambitious enough. This assumption is misleading and does not acknowledge the high investments the automotive industry has devoted to researching and developing further improvements in the efficiency of conventional combustion engines and to new drive systems. It would be more accurate to say that the automotive industry is working with high priority on the reduction of CO 2 emissions and is doing its utmost to achieve the challenging consumption targets: Despite the crisis, the German automotive industry has maintained its spending on research and development at a high level. The automotive sector accounts for more than one third of all the German economy s R&D expenditure. A large proportion of the 20 billion Euros invested in R&D in 2010 was dedicated to the field of alternative drives and the optimization of classic combustion engines. Very recently, many cost-effective CO 2 measures have already been introduced. Further savings will be associated with increasingly higher costs since, in order to come ever closer to the physical limits, an increasingly intensive application of technology is required. Thus the reduction of CO 2 values in the past cannot be projected on a one-to-one basis for the years to come. The development of CO 2 values is not a straight linear descent, and earlier CO 2 reduction successes cannot be repeated automatically each year. It is essential to take account of the life cycles of the vehicles. Today s CO 2 values for a passenger car launched on the market are fixed for the duration of the vehicle s market life and cannot be altered every year. In a comparison of CO 2 values, German manufacturers are ahead. According to the Kraftfahrt-Bundesamt (Federal Motor Transport Authority, KBA) German manufacturers had a lower CO 2 value than importers in all ten vehicle segments in Germany in Progress in the reduction of CO 2 should also be positively received by the EU. Right from the start, targets should be set so as to be achievable. If this is not the case, penalty payments would be inevitable absorbing resources that it would make better economic sense to spend on consumption-reducing technologies, and hence on climate protection. Regulation for heavy commercial vehicles in preparation The market for heavy commercial vehicles is more fragmented than the market for passenger cars The debate and the preliminary work for a C0 2 regulation for the segment of heavy commercial vehicles are being prepared at present by the EU Commission. However, compared with passenger cars, the market for these vehicles is much more fragmented it ranges from dump trucks on building sites to long-distance trucks. Thus the size, weight, field of use, driving performance and also the conditions of use of HGVs diverge widely, and it is difficult to find any common denominator. Unlike passenger cars and light commercial vehicles, it has not been possible up till now for good reason to fully document the CO 2 emissions of heavy commercial vehicles. Moreover, the question also arises as to the extent to which regulation makes sense in the segment of heavy goods vehicles. Unlike passenger cars, where emotions play a significant role in purchasing decisions, the market for HGVs is driven by purely rational and economic considerations. In the haulage industry, particular importance attaches to the factors price of diesel and operating costs. Thus the decisive buying criteria are the purchase price and the running costs. Fuel costs currently make up 30 percent of the cost structure of long-distance road haulage, and are by far the biggest single item. This implies that transport firms have a massive selfinterest in lorries whose consumption is as low as possible. A regulation that is driven by climate protection considerations is open to question a priori, in the sense that the market itself creates the necessary efficiency dynamics.

61 61 The Trade Policy of the EU Preparing the Way for Growth The future growth of individual mobility will take place primarily outside the established markets. Countries and regions such as Russia, India, China, the ASEAN states and MERCOSUR have a great deal of catching up to do where mobility is concerned acquiring one s own vehicle is one of the priorities of the growing middle class in these countries. In addition, the expansion of the infrastructure requires the use of commercial vehicles. However, participation in this growth cannot take place solely from Germany or from Europe. Long transport routes and, in particular, high import duties and other non-tariff barriers to imports complicate the opening up of these important future markets. In some cases these barriers lead to a situation where only production in the country itself enables the market to be accessed, although in other ways local production would not be efficient. The EU is more open than most automotive markets in the world German technology and the know-how of the German automotive industry are highly regarded in other countries. With their presence at more than 2,000 locations in other countries, manufacturers and increasingly suppliers, too are participating in the global growth of the sector. Vehicles from German brands are regarded as status symbols worldwide. Whereas the EU offers a largely open market with about 15 million units per year, many non-european states try to protect their own automotive industry. Thus they seal off their markets. Import barriers distort market access Martin Jäger, Head of Global External Affairs and Public Policy, Daimler AG (Chairman of the Committee for International Trade and Global Economic Issues) Argentina Colombia MERCOSUR ASEAN China India Russia Value-based import restriction for foreign automobile manufacturers Regulations on the use of certain fuels High import duties (35 percent) High import duties (up to 80 percent in some cases), technical barriers to imports Import duties (25 percent) and local content requirements, investment regulations, technical barriers to imports High import duties up to more than 100 percent, technical barriers Import duties, local value-added requirements, legal uncertainty A strong international presence is essential to the success of the German automotive industry. Our exports drive economic growth, generate tax income and create jobs domestically. For these reasons, we rely more than ever of open markets around the world. These measures are intended to shield local industry and attract investors. However, if the production of vehicles and possibly also of vendor parts is positioned in a foreign location solely because of protective measures of this kind, jobs will inevitably be lost in Germany and in Europe. Nevertheless, there are also good reasons to invest directly in other countries on one s own initiative, such as market proximity, low logistics costs or higher customer acceptance. In this situation, jobs abroad also secure jobs at home.

62 62 G e n e r a l C o n d iti o n s o f th e A uto m oti v e I n d u stry Trade policy must be industry-oriented An efficient trade policy needs to ensure optimal conditions in Germany and Europe as an export location. In this way enterprises in the automotive industry can continue on their course of globalization while Germany itself remains attractive as a location for production and export. Its attractiveness should not be diminished by the protective measures of other countries competition with other locations should rest on existing conditions such as infrastructure, cost structure, market volume and availability of human resources and raw materials, not on import barriers motivated by purely protectionist considerations. Here, policy must support its industry at a national and international level in securing and improving market access in non-eu countries. Trade policy should not be an end in itself, but must be a policy oriented towards industry and the people who work in it. Moreover, trade policy should be kept strictly separate from other policy aims human rights, as well as environmental policy objectives, should not become mixed with free trade agreements or the Doha Round, as otherwise negotiations would soon become thematically overloaded. Relationship between exports and production abroad reversed in 20 years Germany has to hold its own in global competition as an export-oriented location for industry. Current figures show that the automotive industry is succeeding in this. Thus in 2009, more vehicles were built abroad for the first time than here in Germany, and in 2010 nearly a million units more: 6.8 million passenger cars and commercial vehicles were manufactured abroad and 5.8 million at home. Exports and local production abroad in thousands 10,000 8,000 6,000 4,000 2, Exports Local production Source: VDA

63 63 At the same time, the ratio of domestic products to exports is changing. In 1990 just under 60 percent of the vehicles sold abroad were exports from Germany. In the year 2000 the exports made up only about 48 percent; in 2010 this proportion went down further to 41 percent. Correspondingly, 59 percent were produced in locations abroad, representing a virtual reversal of the ratio within twenty years. Here, the German automotive industry s trend towards globalization is very apparent. Current themes of trade policy The negotiation of agreements and the dismantling of trade barriers are often long drawn-out processes. Thus the Doha Round has also been on the priority list of the German automotive industry for several years now. At the same time, from the viewpoint of the VDA, the precept of quality before time has to apply in negotiations. This is of especially great importance in the negotiations with India. Here, we expect a complete dismantling of tariffs on both sides. There must be no over-hasty conclusion of an agreement in which high Indian import duties become embedded. The following table gives an overview of the major current trade policy topics of the German and European automotive industry. More information can be obtained from the white paper of the VDA Trade policy priorities of the German automotive industry ( Handelspolitische Prioritäten der deutschen Automobilindustrie ), which can be found on the homepage of the VDA. Dr. Hans Georg Raber, Director of Tax and Customs Duty Policy Volkswagen AG (Chairman of the Customs Duties and Consumer Tax Committee) Issues related to customs duties and indirect taxes have strategic importance for the increasingly globalized automotive industry. Overview of current trade Topic Status Aims Doha Round Free trade agreement with India Free trade agreement with ASEAN states Free trade agreement with South Korea Free trade agreement with MERCOSUR USA: Transatlantic Economic Council (TEC) Negotiations in progress, conclusion not in sight Negotiations in progress Negotiations are in progress with individual countries Agreement comes into effect provisionally in July 2011 Negotiations making slow progress, protectionist tendencies, particularly in Argentina, in the form of import restrictions Current intensification of TEC activities Improved market access in emerging countries Limiting the flexibilities allowed to developing countries in the dismantling of tariffs Indian side does not wish to dismantle import tariffs, European automotive industry offers long adjustment times but requires total dismantling of tariffs Complex negotiations with individual states only, not with ASEAN as a whole. Automotive industry is a sensitive sector almost everywhere, so difficult negotiations can be expected Agreement favors one-sided exports from South Korea to the EU compared with exports from the EU to South Korea, discrimination-free CO 2 regulation in South Korea VDA welcomes the resumption of negotiations, asymmetrical dismantling of tariffs (faster reductions in the EU than in Mercosur), dismantling of discriminatory measures Lighthouse project: electromobility Japan Updating of the EU-Japan Action Plan Intensification of cooperation over non-tariff trade barriers

64 64 G e n e r a l C o n d iti o n s o f th e A uto m oti v e I n d u stry Overseas shows Joint appearances at overseas shows under the Made in Germany slogan are an important instrument, particularly for medium-sized companies in the supply industry. The VDA traditionally monitors its member companies at the main exhibitions held all over the world. These appearances are supported and supplemented by add-on programs, such as conferences, factory visits and talks primarily with management staff from purchasing departments, and by match making, in other words bringing German companies together with representatives of the host country. The VDA has also accompanied its members to other countries, particularly during periods of economic crisis. This has been acknowledged very positively in countries in which the German motor industry has flown the flag. For example, in recent years the VDA initiated regular attendances at the main motor shows in Russia and plans to continue to do so. This September the organization is planning to attend COMTRANS, the main commercial vehicle show in Russia. In addition, it plans to attend shows in Brazil (AUTOMEC supply industry exhibition) and China (Auto China in Shanghai). At the start of the coming year, there will also be an event in India in January. AutoExpo, accredited by the International Organization of Motor Vehicle Manufacturers OICA, is staged every two years and has developed into a continuously growing meeting point for the industry. As 2011/12 is officially the year of Germany in India, featuring a large number of bilateral meetings and events, German companies are increasing their commitments in that country. Further information on overseas shows and the additional events staged during them, as well as the terms and conditions for attending the shows, are available from the VDA. Please contact Ms Angela Mans, mans@vda.de, or Helmut Weirich, weirich@vda.de.

65 65 Raw Material and Energy Supplies The trend in raw material supplies and prices The unexpectedly dynamic upswing in 2010 pushed raw material prices higher. The HWWI index registered an increase of more than 36 percent in 2010 on a Euro basis. Without energy commodities, the index climbed more than 37 percent. In the meantime, it is not just the level that is alarming the German auto industry: the high volatility impedes planning considerably. Products ranging from a sourced auto part to a complete airplane are developed and manufactured in multi-year cycles. At the same time, the ability to plan ahead for costs is of major importance. The great intensity of the fluctuations leads to a situation where long-term contracts between raw material suppliers and companies in the automotive supply chain become less important. On top of that, there are severe distortions in world markets. The BDI raw material policy committee has identified more than 500 trade-distorting measures related to raw materials, with more than 100 in China alone. Europe and Germany are, and will remain, net importers for most raw and basic materials needed for automotive production. So it is crucially important that a raw material policy focus on the reduction of these restrictions and thus provide globally competitive purchase prices.

66 66 G e n e r a l C o n d iti o n s o f th e A uto m oti v e I n d u stry Energy: the great influence of policy Federal government presents energy concept with time horizon to 2050 In September 2010, the federal government presented a comprehensive and ambitious energy concept for an energy supply system for Germany up to 2050, which would be environmentally friendly, secure and affordable. On this basis, it is possible to embark on a long-term, strategically oriented energy policy. For the production of vehicles and parts, the automotive industry needs a reliable, affordable electricity supply. This security of supply should not be put at risk by the high proportion of imported electricity planned for the year There is also a need for readjustment of electricity prices, as reduced taxation for electricity for the manufacturing industry now discontinued in some cases is not the right direction. The aim needs to be internationally competitive prices for industrial electricity. The need to secure raw materials for renewable energies in the long term The requirements of the energy concept for the area of mobility are formidable. It is planned to cut energy consumption by 10 percent by 2020, and by 40 percent by 2050, compared to This ambitious aim is to be achieved primarily by using alternative drives and alternative fuels. The VDA supports the intensified use of renewable energies, as regards both second-generation biofuels for combustion engines and electricity from regenerative resources for electromobility. However, as yet, the energy concept provides no answer to the question of where the quantities of biogenic raw materials are to come from. These quantities will not be attainable from internal sources alone. Therefore the course needs to be set today for securing the supply of raw materials in the long term on a strategic basis. Here, policy will have to assume a high measure of responsibility. The energy concept contains points that require further discussion. Thus, for instance, there is no commitment to an efficient infrastructure for all transport modes. In the interests of sustainable mobility, the aim should be optimal networking of the various modes of transport according to their strengths. Development of electricity generation/consumption in Germany up to 2050 Units in TWh 700 Energy concept 2010 Energy forecast (Reference) 2050 (Target) Renewable raw materials Imports Conventional energy Others Sources: Federal Office of Statistics, DEBRIV

67 67 Moreover, the concept gives the impression that the areas of transport, heating and electricity should contribute equally in absolute terms to the reduction of CO 2. Such an approach does not regard the cost-benefit ratio for the national economy. CO 2 reduction in the area of mobility causes by far the highest costs per metric ton of CO 2 saved. The requirement, anchored in the concept, for ambitious CO 2 limit values for heavy commercial vehicles is also misleading. The multistage manufacturing process alone makes this segment unsuitable for regulation of this kind. For years, energy prices in Germany have been going up. This has meant a further rise in energy costs for the automotive industry. The main factors responsible for the rise in prices have been tax increases and interventions in the energy market anchored in legislation. Here, electricity and energy taxes, levies for renewable energies, combined heat and power (CHP) and additional costs from EU emissions trading should also be mentioned. Other factors affecting the price of electricity, such as the development of raw material prices, come only second to these. Electricity and natural gas made more expensive by state-imposed charges These price pressures have made the competitive position of Germany as a location for the automotive industry more difficult. The half-yearly survey of comparative industrial electricity and industrial natural gas prices in EU member states, conducted by the VIK (Verband der Industriellen Energie- und Kraftwirtschaft, Germany s industrial energy and power federation), illustrates the price situation in According to this survey, German industrial natural gas prices in the first half of 2010 were the second highest in the EU. Only in Sweden are gas prices higher. Following a price decrease in 2009 due to the general economic crisis, natural gas prices in most EU countries have been rising again since the middle of 2010, and the position of Germany compared to other European countries has deteriorated again since then. When industrial electricity prices in the EU are compared, it becomes clear how disparate they are; for example, the lowest and highest prices differ by a factor of almost three. Germany is positioned in the most expensive third. Compared with important competitors like France, and with most of the new member states in Eastern Europe, Germany suffers sometimes considerable electricity price disadvantages. EU industrial gas price comparison Group 15: 280 GWh < Consumption < 1,120 GWh. status: First half 2010 EU industrial current price comparison Group IF: 70 GWh < Consumption < 150 GWh. status: First half 2010 UK 1.66 Romania 1.84 Bulgaria 2.09 Netherlands 2.12 Belgium 2.13 France 2.2 Turkey 2.26 Latvia 2.26 Spain 2.31 Poland 2.41 Portugal 2.53 Lithuania 2.57 Finland 2.66 Italy 2.66 Czech Rep Slovakia 2.71 Estonia 2.71 Germany 2.91 Sweden ,0 Ct/kWh Prices inclusive of taxes (without V A T ) Estonia Bulgaria Portugal Ireland Romania Norway Finland Croatia France Sweden Greece Spain Belgium Turkey Latvia Slovenia Poland Germany Netherlands Denmark Czech Rep. Slovakia Italy Cyprus UK Ct/kWh Prices inclusive of taxes (without V A T ) Sources: Eurostat, VIK Sources: Eurostat, VIK

68 68 G e n e r a l C o n d iti o n s o f th e A uto m oti v e I n d u stry Taxes and levies now constitute almost half of electricity costs In addition to the price pressures of the last few years, prices have been driven up since the beginning of 2011 by new tax increases that have come into force, such as the eco-tax, a further increase in the EEG levy and the additional costs that are emerging as a result of EU emissions trading. The German Renewable Energy Act (EEG) requires electricity generated from renewable energies to be prioritized by network operators as an input into the German grid. It is remunerated according to fixed preferential rates and traded by network operators on the electricity stock exchange. The resulting costs in excess of conventional electricity generation are distributed among all end customers via the EEG levy. In 2011, the EEG levy is going up to 13.5 billion Euros, meaning that it will have a greater volume than the Länderfinanzausgleich (the fiscal equalization scheme between German federal states). In 2010, the EEG levy was still cents per kilowatt hour (kwh), but for 2011 it has been fixed at cents/kwh. In the next few years, further substantial increases in remunerations are to be expected, due to strong further expansion of plant capacities for renewable energy generation, especially photovoltaics. Further large increases in EEG levies can also be expected due to relatively low earnings from renewable energy electricity on the spot power market. This means that, with regard to industrial electricity prices, as of 2011 almost onethird of the electricity tariff is accounted for by the EEG levy alone, whereas the real costs of electricity production would only constitute about half of the electricity bill. This situation compromises the competitiveness of German enterprises. Although renewable energies make an important contribution to energy supply and climate protection, they must nevertheless establish themselves as soon as possible on the market without the help of subsidies. Only then is their contribution to climate protection and security of supply sustainable. Along this path, subsidies need to be applied efficiently in order to attain these ambitious objectives while imposing the smallest possible financial burden on consumers. Thus it is to be welcomed that the Federal Environment Ministry (BMU) and the solar industry have spoken out in favor of bringing forward to July 1, 2011 the reduction of remuneration for photovoltaic electricity planned for January 1, However, this can only be regarded as a first step, since in particular a general capping of the burdens on industry and greater orientation of the levy toward the total cost of electricity are still absent. Similarly to the EEG remunerations, the promotion of electricity generated in highly efficient combined heat and power plants, laid down in the Combined Heat and Power Act (Kraft-Wärme-Kopplungs-Gesetz, KWK-G), is also transferred to all final consumers. In 2010 the KWK levy was 0.13 cent/kwh. Since the subsidizing of many existing modern CHP plants came to an end in 2010, the KWK levy for 2011 has gone down to 0.03 cent/kwh. However, this is far from sufficient to compensate the burden resulting from the increase in the EEG levy. Planned eco-tax increases at least partially canceled Part of the federal government s savings package from 2010 includes increased tax revenues from a reduction of eco-tax relief for the production industry. This has been implemented via the Haushaltsbegleitgesetz (Accompanying Budget Act), which came into force on January 1, The original plan would have considerably detracted from the competitiveness of the German automotive industry. At the last minute, so to speak, the stringent measures that had been planned were substantially mitigated. The version of the Accompanying Budget Act 2011 passed by the German Federal Parliament featured important amendments: The relief rates according to the Energy Tax Act ( 54 EnergieStG) (heavy oils, natural gas and similar) are cut not to 20 percent, as originally planned, but to 25 percent of the regular tax rates. The Spitzenausgleich (tax cap) will not be reduced, as previously planned, from 95 to 73 percent, but only to 90 percent. This will substantially alleviate the additional tax burden on particularly energy-intensive firms.

69 69 The Sockelbetrag/Selbstbehalt (basic sum before tax deductions) will not, as originally planned, be raised to 2,500 Euros but to 1,000 Euros. This will mean that smaller firms with relatively low energy consumption will also be able to benefit from the tax concession. For the automotive industry, it is important that the improvements made benefit not only energy-intensive enterprises in particular ( Spitzenausgleich ), but also small and medium-sized firms ( Sockelbetrag ). However, it is still open to doubt whether the production industry should be burdened with higher taxes at all. This additional burden contradicts the announcement that taxes and levies would be restricted. It is also a cause for concern that, by introducing the new tax relief procedure instead of reducing taxes, the taxation of electricity has become even more complex, and that enterprises are now required to make prepayments. In the revised Emissions Trading Directive, significant changes in the emissions trading system are fixed for the third trading period. Auctions will become a basic principle of allocation. From 2013, there will no longer be any free allocation for the generation of electricity, whereas free allocation to industry will be reduced from 80 percent in 2013 to 30 percent by One exception is that for sectors of industry threatened by the transfer of production to places outside Europe ( carbon leakage ), there will be a 100 percent allocation free of charge until However, allocation will no longer, as previously, take historical emissions as a basis, but will be based on fixed benchmarks. Instead of the promised reductions in taxes and levies, the automotive industry is left with higher energy taxes The third period of emissions trading ( ) will bring further increases in energy costs for enterprises All in all, this will cause the costs of emissions trading through acquisition of certificates to rise. As a result, direct costs will rise due to more expensive energy and to the emissions trading instruments to be autonomously implemented within plants, and indirect costs will go up due to the rise in prices of supplied materials these are costs that will not be incurred in other countries outside the EU. Development of individual German state burdens since 1998 Burdens of electricity prices in billions of Euros* ) ) (Estimate) *Excluding V A T **Laur AK Tax estimate May ***Added costs in relation to stock exchange prices Concession issue*** (estimated) Electricity tax StrEC/EEC KWKG** Source: BDEW

70 70 G e n e r a l C o n d iti o n s o f th e A uto m oti v e I n d u stry Current Tax Policy Coalition agreement what was implemented? Based on the coalition agreement, the coalition sent the right signal in the crisis with its emergency tax program, the economic stimulation law and the correction of serious deficiencies in the company and capital tax transfer reforms. With the subsequent improvement in the business tax reform of 2008, the elements tending to intensify the crisis were attenuated. This primarily affected the interest barrier, trade tax addition and loss offsetting, whose defects were manifest on a massive scale during the economic crisis. Meanwhile, a serious setback resulted from the fact that the EU Commission categorized the clause to correct the loss offset as irreconcilable with the EU state aid law. Easing capital transfer tax helps suppliers As part of capital transfer tax reform, the measures to ease company successions are an important feature for family and individually owned companies in the supplier sector. Here it was necessary to further loosen its criteria. In the interest of maintaining companies flexibility, the requirements were reduced from the initial 15 years to 10 or 5 years. Measures in the economic stimulation law The economic stimulation law provided the following amendments in the company tax reform of 2008: permanent introduction of a higher allowance of 3 million Euros in the interest barrier, introduction of an EBITDA carry-forward amount for the interest barrier, Gerd Faber, (Chairman of the Tax Committee) The VDA Tax Committee formulates the automotive industry s fundamental position on tax policy. improvement in the application of the escape clause in the interest barrier for German companies, reduction from 65 to 50 percent in the trade-tax additions rate relating to rental and lease interest, easing of company restructuring with the real estate transfer tax, a cut in the holding period in capital-transfer-tax regulation to spare undisclosed reserves in the case of company succession, in the case of the loss-deduction limitation (shell company), the time limit in the restructuring clause has been suspended, the deduction of losses in the amount of the undisclosed reserves allowed and a corporate clause introduced, reintroduction of the emergency depreciation of low-value assets with purchase costs of up to 410 Euros. Note: the EU Commission has declared the restructuring clause to be irreconcilable with EU state aid law in loss offsetting.

71 71 The taxation of vehicle sales to factory staff (taxes on employee-purchased cars) had been improved previously as one of the implementation measures from the coalition agreement. The administrative directive dating back to 1996 was updated in coordination with the states. In the appraisal of the cash benefit from car sales, the 80 percent average discount in the market is taken into account retroactively to January 1, 2009, instead of the previous 50 percent. In the process, indirect discounts such as the inflated trade-in value for used vehicles are included. With the new regulations, the federal government is responding to changed market conditions that led to inflated taxation and draws lessons from a decision of the Federal Finance Court. A more appropriate and realistic taxation policy has been established under the new administrative directive. But the situation looks less favorable with regard to the announced reform of community financing, with the elimination of the business tax as its core measure. Due to community representatives unbending attitude, it should not be expected that the obsolete business tax will finally be eliminated. In the auto industry s view, at a minimum, it must stake everything on trade tax additions being eliminated for interest and financing elements for rents, leases, leasing rates and licenses. No progress recognizable in business tax reform In accordance with the coalition agreement, light commercial vehicles such as vans and light lorries have been incorporated into the promotion of retrofitted particulate filter systems for diesel vehicles. For the tax measures from the coalition agreements that are still up in the air, the auto industry is placing special importance on the introduction of an up-to-date group taxation system and the announced revision of the computation of deficits carried forward. This is all in addition to the tax simplification package. That is because there is a need for a modern, practice-orientated organization of German corporate tax law.

72 72 G e n e r a l C o n d iti o n s o f th e A uto m oti v e I n d u stry Tax simplification the order of the day The efforts of the federal government to simplify taxation practice and to free it from unnecessary bureaucracy are welcomed. But the proposals submitted for a tax simplification law in 2011 so far only take this goal into account to a limited extent. This applies to the scope of the proposed simplifications and their time frames. Likewise, a whole series of measures must become more concrete. For example, the simplification needed in the law covering travel expense taxation. Still more simplification measures must be put into motion. The industry has submitted comprehensive proposals. They range from granting reimbursement of withholding taxes and simplifications in assessments of accruals and payments in kind through to further improvements in the interest barrier. The simplification of company car taxation is considered especially important, as there is an urgent need here. Legislators and financial authorities must take action based on current decisions from the federal finance court. The requirements in the coalition agreement would also be met. Proposals for tax simplification The industry considers the following points to have priority in tax simplification: tax law on travel costs company car taxation binding effect for payroll tax appeal rulings clear definition of turnover tax consolidation burden of proof for turnover in the domestic market organization of the pretax payment process electronic invoicing conversion of the monthly tax-free payment-in-kind allowance into an annual amount performance of a timely audit

73 73 Company car taxation BFH confirms its legal opinion With three verdicts on September 22, 2010 (VI R 54/09, VI R 55/09, VI R 57/09), the federal finance court (BFH) has confirmed its legal opinion whereby the 0.03 percent additional charge for trips undertaken between home and the workplace cannot be used to assess any kind of additional private use of the company car. Its purpose is merely a comparison of purchase expenditures that are deductible but that did not in fact occur. The non-application decree from 2008 can no longer be adhered to. The financial administration has employed it thus far to hinder the application of this judgment and foster excess taxation. In the interests of tax simplification and a reduction in bureaucracy, the best solution is to eliminate the 0.03 percent additional charge. In return, the commuting allowance deduction would be eliminated through the adoption of the 1-percent flat-rate approach, insofar as company or service cars are used for trips between home and the workplace. The proven 1-percent flat-rate method tied to the gross list price, and the alternative, the logbook / total cost method, should be adhered to without any changes. In this way, the 1-percent method will regain its role as a simplifier. The management of logbooks or comparable records must be the exception. This is crucial, especially with regard to volume processes and the potential for disputes over logbooks. Studies have proven that the 1-percent figure is appropriate taxation for the entire benefit of using a company car. The basis for the assessment of the tax is already gauged adequately with the 1-percent figure. Eliminating the 0.03 percent additional charge is the best solution The elimination of the 0.03 percent additional charge and of the commuting allowance for service and company cars relieves companies and their employees as well as the taxing authority. As a result, complicated appraisal, notification and auditing duties are eliminated. The confusing and contentious differentiation between surcharge regulations and commuting allowances for days of use and distances would be relegated to the past, as would the determination of the normal workplace(s) on site. This represents an enormous simplification, especially for staff in the field. New registrations of company vehicles 2010 Units in percent Small cars 7.0 Mini class 3.2 Others 0.5 Mobile homes 0.2 Utilities 7.7 Compact class 26.5 Large capacity vans 5.5 Mini vans 2.5 Sports cars 1.6 Off-road vehicles 9.2 Upper middle class 8.5 Upper class 1.5 Middle class 25.8 Source: VDA

74 74 G e n e r a l C o n d iti o n s o f th e A uto m oti v e I n d u stry With the elimination of the 0.03 percent surcharge, which is one of a kind globally, the adjudication of the federal finance court would be met. The terms of the coalition agreement would be implemented and the vote of the federal council would likewise be taken into account. That would be the best solution. The administrative instructions from finance authorities to implement the BFH adjudication make company car taxation even more complicated, promote the flight into the administration-heavy logbook method, and thus represents a reversal in tax simplification efforts. The finance authorities thoughts of canceling the adjudication of the federal finance court with a non-application law should be rejected. This would lead to a massive tax increase that would contradict the tax policy of the federal government, whose goal is tax relief for citizens and companies. The ecological overload from the company car tax would run counter to the system The simplification of the service and company car tax must not be thwarted by the ecological orientation of the tax, as this would infringe the basic principle of taxing income. It would lead to tax law distortions that would work against the system and would involve substantial stresses and complications. It is conceptually misguided to transform the taxation of the private use of company and service cars into an instrument for environmental objectives. This would lead to complications and stresses and open the door to further interventions in income tax law. For employees, the measurement of the cash-value benefit from the private use of company cars based on CO 2 emissions would work against the basic principles of wage taxation. The cash value benefit for the provision of a car is counted as wages. No true counter value accompanies an increase in the basis for tax assessments, and the additional tax exposure triggered in this way would lead to excessive taxation. This would mean a clear infringement of the principle of performance capacity. The ecological orientation of company car taxation would have a sharply higher inclination toward the heavily bureaucratic logbook method, with substantial assessment and control costs as a result. In addition, a sharp increase in legal disputes associated with the authentication of logbooks can be expected. Incidentally, a flat-rate method orientated to CO 2 emissions undermines the goal of tax simplification. Other parameters beyond the gross list price would have to be compiled and the CO 2 emissions, especially for older vehicles, would have to be researched at great expense.

75 75 Other changes in tax legislation It was possible to prevent a looming exposure in the tax treatment of accident costs associated with the provision of a company car to an employee. Effective January 1, 2011, accident costs taken over by the employer are no longer part of overall costs and are no longer covered by the 1 percent figure. There is, however, a simplification provision: accident costs borne by the employer that do not exceed 1,000 euros (plus VAT) per damage event continue to be assigned as part of the total costs and not assessed as a separate cash value benefit with the 1 percent method. We managed to ensure that the amount of damage without the value added tax and after the deduction of any insurance payments is determinative for the 1,000-euros non-claimed figure. This assures that minor losses and accident damage due to slight or average driving carelessness are excluded, just as they have been to this point. Employers continue to be spared a scarcely manageable bureaucratic expense. Financial authorities have changed their legal opinion on the VAT treatment of receivables in a leasing company s (subsequent) entering of a process. It holds that the delivery to the customer in these cases is no longer made to be reversible. Through petitions to the state s division heads, the VDA was able to keep the changed legal opinion from taking effect retroactively. Valued at 150 euros, the vehicle tax break for diesel cars with the Euro 6 emission standard was restricted to the time period between January 1, 2011 and December 31, 2013, for reasons relating to European law. The promotion has been maintained for the favored vehicles purchased between July 1, 2009 and June 3, 2010, in order to protect legitimate expectations. This limitation on the Euro 6 promotion is questionable. It contradicts the desire to widely distribute Euro 6 vehicles. The break for diesel cars with the Euro 6 emission standard is expiring at the end of 2013 Energy taxation taking the interests of the auto industry into account Energy taxation is gaining increasing importance in the current tax policy debate. At the same time, besides fuel taxation, it mainly involves electric power and energy taxation regulations for the manufacturing sector in the form of the eco-tax. Remedies in the legislative process Measure Current law Change planned initially Change decided Reduction in the tax cap Reduction in the tax allowance Increase in the basic allowance 95% 73% 90% 40% 20% 25% 513 euros 2,500 euros 1,000 euros

76 76 G e n e r a l C o n d iti o n s o f th e A uto m oti v e I n d u stry Together with the BDI, we succeeded in preventing drastic restrictions in electricity- and energy-tax abatements for manufacturing firms within the framework of the supplementary budget law of The intensification of the eco-tax originally in the federal government s cost-cutting package, which would have massively limited the auto industry s international competitiveness, was substantially softened in the legislative process. So the tax cap for especially energy-intensive companies was merely reduced by 5 percent instead of 22 percent. And the increase in the base amount for small and medium-sized companies went up from 513 to 1,000 euros, instead of 2,500 euros. Changes in the eco-tax The following changes for 2011 and 2012 resulted from the accompanying budget law of 2011 on energy taxation for the manufacturing sector (eco-tax): The reduced energy-tax rate (12.30 euros/mwh) is repealed and replaced with a smaller, volume-based tax relief process. As a result, the tax abatement is reduced from 40 percent (8.20 euros/mwh) to 25 percent (5.13 euros/mwh). Increase in the base amount (retention): 10 ( 9 b new) electrical power StG: from euros to 1,000 euros 54 energy StG: from 205 euros to 250 euros 55 energy StG: from euros to 750 euros Reduction in the relief rate in 54 energy StG (fuel oil, natural gas, among others) by up to 37.5 percent (natural gas from 2.20 euros to 1.38 euros) Reduction in the relief rate at the tax cap from 95 percent to 90 percent New regulations on the use of energy contracting (restriction on tax relief in the case of handover of energy use to third parties, damages contracting. )

77 77 Despite the reductions that took place, the manufacturing sector was not actually burdened with tax increases. The efforts to limit the burden of taxes and charges stood in contrast. As planned, it proved possible to limit the changes in the electricityand energy-tax law to prevent abuse of relief rules involving the energy tax ( damages contracting ). It is also conceivable that new complications and pressures have been created in place of the reduced tax rates with the introduction of a new reimbursement process. It should also be recognized that the reduction in the tax abatements for companies in the industrial sector has been detrimental to agreements for eco-tax reform. The relief measures were a remedy for the drastic increase in energy taxes within the framework of eco-tax reform, in order to spare German industry from disproportionately high burdens and to ensure that no competitive disadvantages result. This still applies. Instead of weighing the industry down with energy-tax increases, it is important to come to an agreement on the continuation of the relief measures for the manufacturing sector in At the same time, regulations must be established that do not impair the international competitiveness of the German auto industry and increase the attractiveness of Germany as an industrial location. Other relief for the manufacturing sector is required Tax-relief engine test stands There has been an important improvement in the taxation of engine test stands: at the VDA s initiative, there was an agreement to grant a tax abatement for gasoline used in the production of electricity, effective January 1, This occurred within the framework of the revision in the electricity- and energy-tax law. Until that point, only the use of diesel fuel was covered. The improvement in the tax parameters for energy production in engine test stands brings important relief to the auto industry. A further reduction in the tax disadvantages for the German auto industry in fuel taxation is still up in the air; this is the tax break existing in other EU states for fuel for the first fill-up when vehicles are exported to third countries. To eliminate this competitive disadvantage, it is imperative to introduce this form of tax break in Germany as well.

78 78 G e n e r a l C o n d iti o n s o f th e A uto m oti v e I n d u stry EU preventing an intensification of taxation The efforts of the federal government to limit the tax burden in Germany must not be undermined by tax increases at EU level. This applies to the planned drastic increase in the diesel tax rate as part of the revision of the EU energy tax directive as well as to efforts to boost company car taxation. A higher diesel tax rate would endanger CO 2 goals Serious considerations relating to tax burdens, climate and employment policy are countering an increase in the diesel tax rate: Diesel engines are more efficient than gasoline engines. Their fuel consumption is about 25 to 30 percent less. The edge in efficiency is also expressed in lower CO 2 values. As a result, the CO 2 value for a diesel is on average 20 g/km below that of a gasoline-fueled car. Even when this difference is reduced with the use of new technologies, the diesel s advantage is maintained in fuel consumption and emissions to a degree. Overall, the internal combustion engine has substantial potential for improvement through innovative engine and emissions technology in coming years. An intensification in the diesel tax would lead to a substantial decline in the diesel share of the European vehicle fleet. With an increase in the price of diesel fuel, the price elasticity in the demand for diesel vehicles is high: a price increase leads to a greater reduction in demand. An increase in the tax burden for diesel fuel and the associated decline in demand for diesel models jeopardizes goals for the reduction of CO 2 emissions. They would also burden the auto industry economically. Over the past 15 years, the European auto industry has invested in the research and development of clean, energy-efficient diesels ( clean diesels ), developing a global lead in the technology. A higher tax burden on diesels would devalue the investments of past years and weaken the position of European auto manufacturers in global markets. Fortunately, the Federal Minister of Finance has made the following clear to the VDA and ADAC: in view of German technological leadership in diesel engines and the attainment of CO 2 goals, the minister rejects the obligatory introduction of the same national tax rate for fuel taxation, which the minister regards in a critical light. The company car tax is no subsidy a cash-value benefit is correctly assessed We must not reach the point where company car tax is intensified at EU level. The assessments of environmental economists do not stand up to critical examination. They argue that regulations covering company car taxation in the EU certainly represent tax subsidies, lead to reduced governmental income and bring damaging environmental developments along with them. The regulations in Germany, which have been particularly criticized, do not represent a tax subsidy at all. An investigation by Professors Musil and Jesse at Potsdam University demonstrates that the cashvalue benefit from the private use of company cars is assessed to a sufficient degree at 1 percent of the gross list price. Since company car taxation in Germany does not represent a tax subsidy, the applicable regulations lead neither to reduced tax income nor negative environmental incentives.

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81 Transport and Infrastructure Policy Gezae Semere Bachelor of Science Informatik, quality management, Assmus Metallveredelung GmbH, Dietzenbach

82 82 Tr a n s p o rt a n d i n f r a str u ctu r e p o li cy Road Traffic Mobility Mainstay Cars high market share continues Car use is independent of age group, household type or size of community The car has an approximately 80 percent market share of passenger transport, making it far and away the most important means of transport. This applies across the board for all age groups, household types, districts, regions and size of community. The car s importance is universal and is even increasing among the growing senior citizens age group: between 2002 and 2008 the proportion of daily car users in this group increased by 10 percent (65- to 74-year-olds) and 8 percent (over 75-year-olds). The need to be able to fall back on one s own car also manifests itself in the fact that just under one third of households with at least three adults possesses at least three cars. The vehicle population in Germany continues to grow (if now only very moderately), as in all Western industrialized countries where the level of vehicle ownership is approaching saturation point. The growth in traffic volumes is also correspondingly slow. Compared with the year before, individual vehicle transport volumes in 2011 are forecast to increase by 0.7 percent to 882 billion person kilometers. This annual rate is also assumed for the years up to In the long term, owing to domestic demographic developments, passenger transport should stagnate. Dr. Ulrich Müller, Director of Global Regulatory & Innovation Strategy, Transportation & Mobility Strategy, Daimler AG (Chairman of the Traffic Committee) Traffic jams, tolls, traffic safety, mobility developments, carriage of goods these issues affect all citizens on a daily basis. In the Traffic Committee, we develop concepts that help to make road traffic smoother and safer and to keep it affordable for everyone. Transport of persons in Germany up to 2025 in billions of person kilometers travelled 1,500 1, Car transport Public road transport Railways Air traffic Sources: DiW, BMVBS, BVU/DLR/ISL

83 83 Trend toward new mobility concepts? Individual vehicle transport is overlaid with a cultural trend: we may be witnessing the first signs that a proportion of the young, urban population is undergoing a shift away from car ownership to car use. Basic mobility is provided by local public transport, supplemented if necessary by car-sharing schemes or rental cars. Car-sharing schemes may gain ground But the group of those who have consciously decided against having a car of their own is relatively small. According to a survey on behalf of the Federal Transport Ministry, on average only around 5 percent of carless households say this applies to them. That corresponds to around 0.9 percent of all German households. The reason most frequently mentioned by these households for doing without a car, at 51 percent, is that running a car is too expensive. That means that approximately one tenth of German households are denied the benefits of car use on economic grounds. Transport of persons in the EU-27 up to 2030 in billions of person kilometers travelled 10,000 8,000 6,000 4,000 2, Car transport Public road transport Railways Air traffic Sources: DiW, BMVBS, BVU/DLR/ISL

84 84 Tr a n s p o rt a n d i n f r a str u ctu r e p o li cy Trucks shouldering the freight traffic burden Commercial vehicles account for almost three quarters of freight transport The road is just as important for freight transport as it is for passenger transport. At approximately 73 percent, commercial vehicles account for far and away the lion s share of freight transport. Road freight transport in 2010 was approximately 455 billion metric-ton kilometers. For 2011 it is anticipated that volumes thanks also to the favorable economic climate will increase by 5 percent to 478 billion kilometers. An annual growth rate of 3.2 percent is assumed for subsequent years up to That means that road freight transport volumes should exceed the 500 billion metric-ton kilometer mark as early as By 2025 specialists are anticipating a rise to 704 billion metric-ton kilometers. Road freight transport s dynamism is therefore continuous. The concomitant challenge is to put freight transport on an even more sustainable footing. Transporting our goods is the bedrock of a successful economy and the ability to export and does not just benefit companies and employees: imports and domestic transport, including the transport of consumer goods for households here in Germany, account for approximately 70 percent of total transport movements. Goods traffic in Germany up to 2025 in billions of ton kilometers 1, Road (HGV) Rail Inland waterway Source: BMVBS Goods traffic in the EU-27 up to 2025 in billions of ton kilometers 3,500 3,000 2,500 2,000 1,500 1, Road (HGV) Rail Inland waterway Source: EU Commission

85 85 The truck in an environmental comparison Calls are often heard for this traffic to be carried increasingly by rail for environmental reasons. This switchover strategy is, however, subject to tight constraints: if the distance between the place of departure and the place of destination is less than 300 kilometers, it is usually not economically viable to use the railway and would not make environmental sense owing to the detours and transshipment operations. But distances less than 300 kilometers are almost universal in the domestic transport arena, which when all is said and done accounts for approximately 78 percent of German freight volumes. Over short and medium distances, the commercial vehicle is also environmentally unbeatable The latest studies by environmental experts reveal that the railway does indeed tend to offer environmental advantages in the case of heavy bulk goods and for container transport. But this presupposes that trains are sufficiently long, the proportion of empty wagons is small and that the pre-carriage and on-carriage distance is sufficiently short. But when the conditions for at least one of the factors are not optimal, the balance of advantage can quickly tip in favor of the commercial vehicle. It can be seen, for example, that when transporting clutch parts from Stuttgart to Rastatt, the commercial vehicle is environmentally advantageous if, for logistic reasons, the train comprises only a few wagons. Greenhouse gas emissions related to selected means of transport t CO 2 u/travel phase HGV Train 10,2 Comparison of greenhouse gas emissions in the transport of heavy bulk goods in works traffic from Stuttgart to Bremen. Travel phase 1: Transport of engines and transmission parts from Stuttgart to Bremen The following assumptions were made for the calculation: General assumption: - No consideration of empty journeys Assumptions specific to the means of transport: - HGV: 30 l/100 km (fully laden, average value for this study) - Distance: 633 km; load status: 84% related to maximum effective loading of freight (semi-trailer) - Rail: Full train (20 wagons); distance: 628 km; swap bodies, which in each case are filled with a load of about 10.5 ton (92% related to the maximum effective loading of freight) 0.0 HGV (30 l/100 km; average) HGV (36 l/100 km; primary data) Train Comparison of greenhouse gas emissions in the transport of heavy bulk goods in works traffic from Stuttgart to Rastatt. For rail, the main run (blue) and preliminary run (yellow) are shown. Travel phase 2: Transport of engines and transmission parts from Stuttgart to Rastatt. The following assumptions were made for the calculation: General assumption: ton, just-in-sequence delivery (2x per working day). - No consideration of empty journeys Assumptions specific to the means of transport: - HGV: Fuel consumption: 2 cases distinguished: - a) 30 l/100 km (fully laden, average value for this study) - b) 36 l/100 km (real consumption for the route travelled and actual loading, challenging route profile) - Distance: 115 km; load status: 79% (semi-trailer) - Rail: Distance 108 km; load status 73% (40-foot container); 6 wagons; preliminary journey by rail, 2 km HGV Source: PE International

86 86 Tr a n s p o rt a n d i n f r a str u ctu r e p o li cy Road and rail transport partners The automotive industry transports approximately half of its new vehicles by rail So nothing would be gained if the market shares of the different means of transport (even with the best of intentions) were to be laid down for the country as a whole from someone s desk. This would not do justice to the complexity and dependence of logistics processes in individual circumstances. Anyway, from the German automotive industry s perspective, ideological trench warfare between the different forms of transport and the selfish market share mentality are things of the past. The choice of form of transport should be decided on purely rational criteria. At the end of the day, the various forms of transport with their different strengths and weaknesses complement one another. For example, numerous transport movements within the automotive industry provide a favorable environment for rail transport, i.e., long distances to sales markets or seaports and a large number of cars to be transported. This allows entire trains to be formed with a high utilization factor. That is why the automotive industry also transports approximately half of its new vehicles by rail for the main run. Heiko Schultz, Director of Transport Logistics, AUDI AG (Chairman of the Goods Transport committee) The automotive industry and its suppliers are not just providers of mobility solutions, but also take advantage of these services as customers. In our work in the VDA Committee for Goods Transport, we try to achieve the best possible conditions for transporting our vehicles and parts via roads, rails and water, and focus dialogue with our carriers.

87 87 Limiting the Burden of Charges High road revenue More than half of households in Germany without a car would like a car, but cannot afford to run one. For the poorest quarter of German households, if they do run a car, the average annual fuel costs of 1,300 euros account for well in excess of 10 percent of their net household income. The mineral oil tax accounts for almost half of the fuel cost This is attributable not least to the fact that the tax authorities have driven up the mineral oil tax to such an extent that it now constitutes almost half of the fuel price (46 percent in 2010). A further 16 percent of the price of fuel at the pump is accounted for by sales tax, which is levied not just on the price of the initial product but on the mineral oil tax as well. What is more, it is the third highest in the EU 27 for diesel and the fifth highest for premium-grade gasoline. In 2010 the tax authorities total mineral oil tax revenues were 33.5 billion euros, which itself resulted in 6.4 billion euros of sales tax. To this was added 8.6 billion euros from vehicle tax. The truck toll revenues contributed a further 3.5 billion euros to the public purse. Considering that in the same year the public authorities only spent approximately 14 billion euros on road infrastructure, it is clear that there is in fact no shortage of available money. Use of income from specific levies on road transport 60,000 50,000 40,000 30,000 20,000 10, Surplus Expenditure for road transport Source: VDA

88 88 Tr a n s p o rt a n d i n f r a str u ctu r e p o li cy Passenger vehicle toll is no solution The experience with the truck toll shows that extra revenues do not boost investment And yet sections of the body politic are regularly on the lookout for new revenue sources and are also broaching the subject of a car toll. They promise to fully offset the cost of the toll by reducing either the mineral oil tax or the vehicle tax. However, in light of the experience with the truck toll and the state of public finances, all the indications are that a car toll would very probably result in extra costs. There are also grounds for fearing that investment in the road network would not be increased either, because matching funds would be cut from the budget. Other reasons also militate against the introduction of a car toll. For example, motorists are typically not time-sensitive; they would therefore frequently divert to the subsidiary network where, however, the risk of an accident is approximately fourtimes higher than on the highway. The occasionally considered autobahn vignette would be environmentally questionable and unjust because frequent drivers would be rewarded and occasional drivers financially penalized. Another favorite argument, that the car toll would enable foreign motorists to also share the cost of using the infrastructure, is unconvincing: foreign cars only account for 2 percent of journey volumes on German highways. Secondly, they already cover the costs they incur on the highways by a very large margin of 193 percent. No to the city toll There are better concepts for rectifying urban traffic Occasionally there are demands for a toll to be introduced for urban areas as well. London and Stockholm are eagerly cited in support isolated cities in which far more than 10 percent of the country s population is concentrated. As service and retail locations, these cities are naturally not in competition with urban areas in their immediate vicinity. In Germany the population is geographically more evenly distributed. The invariable experience of towns and cities that have previously made cars more expensive to use has been that a large proportion of retail customers have defected to the neighboring town or to out-of-town retail centers. In the process, the cities did not just do themselves economic scathe; the result of such a policy is detrimental to the environment as well, as driving distances and emissions tend to increase. If a town or city really is intent on reducing congestion and shortening journey times, it makes far more sense to use telematics to get the traffic flowing. Considering that between 7 and 21 percent of total inner city traffic, depending on the day of the week and time of day, is accounted for by vehicles looking for somewhere to park, dynamic parking guidance systems have proved to be particularly useful. Traffic-dependent, computer-aided traffic light controls that minimize standstill times across the entire road network are helpful. Last but not least, up-to-date travel-time comparisons between car and tram for the route from a P&R location to the town center would make sense to induce motorists to switch to the local public transport network (LPTN), where this seems necessary.

89 89 Halfway house toward transferable license plates A modest contribution to limiting the burden of charges can be provided through the introduction of transferable license plates. These are registration numbers that are issued for different vehicles subject to licensing. But only the vehicle for which the license plate is being used at that moment is ever allowed on the road. This is interesting for households, for example, who switch from a saloon to a cabriolet in the summer. In Switzerland and Austria, vehicle tax and insurance premiums are then only incurred for the vehicle in the more expensive category. Tax reasons are obstructing a more consumer-friendly solution The transferable license plate is supposed to be introduced in Germany in The idea is to be able to register up to three vehicles for the same license plate. Unfortunately, for budgetary reasons, politicians have so far been unable to bring themselves to extend it to vehicle tax as well, so that the saving here in Germany will probably be confined to the insurance premium. Extending the truck toll to federal highways In its coalition agreement, the federal government had pledged not to increase the truck toll. This rendered obsolete the previous government s plan to increase the toll for Euro III vehicles. Here the federal government has kept its word. It came, however, as a complete surprise that it had decided to include four-lane and multi-lane federal highways in the truck toll, but with the toll limited to those sections of these roads that are directly connected to the highway. The federal government is hoping that this move will raise extra revenue of 100 million euros. It remains to be seen whether this is justified in the light of the collection and oversight costs. The promised toll moratorium (no increase in the truck toll) is being offset by an extension of the roads where the toll is levied Given the fact that the federal government ruled out an increase in the toll, this extension of the toll leaves a bad taste in the mouth. In the interests of political credibility, we therefore hope that it remains confined to this small proportion of the federal highways (they represent less than 5 percent of the total network) and is not used as a pretext for extending the toll to all federal highways. But above all it must be ensured that the extra revenue raised benefits the federal highway budget.

90 90 Tr a n s p o rt a n d i n f r a str u ctu r e p o li cy New Eurovignette Directive provokes fears of higher costs Possibility of future toll supplements for pollution and noise emissions There are grounds for fearing a serious cost spike for freight transport arising from European legislation. In October 2010 the Council of Ministers agreed on a concept for amending the EU Directive on Road Charging. Under the terms of the directive, member states will in future be allowed to levy additional costs for pollution and noise emissions on top of charging for road costs. The council did, however, reject the commission s proposal to permit charging for congestion costs as well. Road users already suffer through lost time charging would therefore be a double penalty. Instead, the door is to be opened to greater variation of the toll rate according to the time of day, but done in such a way that it has a neutral overall effect. The absence in the directive of an obligation to include in the truck toll commercial vehicles with a permissible gross weight of less than 12 metric tons remains unchanged. This is right and proper as this vehicle group causes significantly lower infrastructure costs than heavy commercial vehicles and the correspondingly low toll rate would scarcely justify the cost of levying it. As these vehicles tend to be used for local and regional transport and for supplying conurbations, there is also no discernible need for European harmonization. Implementing the promised harmonization The German transport industry had been promised a package of measures worth 600 million euros to level the international competitive playing field as a quid pro quo for the financial burden of introducing the truck toll. To this end there was a reduction in the vehicle tax for commercial vehicles liable to the toll, the introduction of a program to subsidize the purchase of low emission commercial vehicles, a De minimis program to promote safety and the environment and a training and further education program for the transport industry. Regrettably, there have been considerable problems in recent years in paying these very subsidies under the De minimis program with the result that only a proportion of the funds have reached the industry. The federal government has an ongoing responsibility in this regard to remove all the obstacles. It is also hard to understand why, in the wake of the irregular payments of recent years, the industry is now being penalized twice as it were by the additional reduction in the overall available funds to 550 million euros in the 2011 budget.

91 91 Infrastructure for Growth and Employment Importance of the infrastructure Along with educational standards and the legal framework, an efficient infrastructure is one of the most important building blocks of a competitive economy. The German main highway network is the linchpin of our transport infrastructure. Although it accounts for only 8 percent of the total German road network, with a share of over 48 percent, it carries almost half of all annual motor vehicle journeys. If road freight movements are included, then the main highway network s share is even higher, at approximately 72 percent. The proportion is 56 percent of passenger road journeys. German main highway construction not keeping pace with traffic growth The highways are the core of the German main highway network. Its performance per kilometer is even greater than that of the federal main highway network as a whole. Although this network only accounts for less than 2 percent of the total length of the country s road network, it handles just under a third of all motor vehicle movements. Yet federal main highway construction has not kept pace with traffic growth. This has led to a pent-up and growing need for expansion and maintenance, which the public authorities are currently putting off.

92 92 Tr a n s p o rt a n d i n f r a str u ctu r e p o li cy The average daily traffic volume on today s German highway network is more than 50,000 vehicles. On numerous sections, such as the Cologne ring road, the Frankfurt intersection or the Funkturm (radio tower) highway junction in Berlin, traffic volumes exceed 100,000 vehicles. More than one quarter of the total length of the highway network nowadays merits being classified as highly congested. According to federal government information, within a one-year period there are more than 100,000 traffic jams on German highways totaling 180,000 hours of congestion. Almost half of the highway network is permanently at risk of congestion The total time lost by all motorists as a result of traffic jams adds up to millions of hours each year. True, the current Federal German Transport Plan (BVWP) for envisages numerous expansion projects. But even if all the projects are implemented, the expansion of the highway network will not keep pace with the anticipated growth in traffic. The German ADAC automobile club demonstrated this in its study Long-term forecast of traffic quality on selected federal German highways. Notwithstanding the expansion measures, 44 percent of the network would be made up of sections at permanent risk of congestion. A quarter of these sections are even threatened with permanent overload. Based on these calculations, ADAC designed a highway network 2020 showing what a level of expansion that met actual requirements would look like. BAB (federal motorway) Network 2020 ADAC demand Detail map Development of 2,750 kilometers of motorway New construction of 1,600 kilometers of motorway These new stretches are necessary. * These existing motorways must be widened. * * Part sections are already under construction or development (Status: September 2007) Source: ADAC

93 93 More euros for the infrastructure Currently there is not even any guarantee that it will even be possible to implement the projects in the BVWP on time. That would require annual expenditure of at least 5.2 billion euros. In fact, investment in recent years (apart from 2009 and 2010 during which it increased for economic reasons) has fluctuated at just under the 5 billioneuro mark. As a consequence, in 2008, half-time as it were in the Federal German Transport Plan time horizon, barely 43 percent of the necessary funds had been spent. In light of the fact that the cost of road-building work has increased by 20 percent since the beginning of the planning period, the ratio is effectively even lower. In Hesse, North Rhine Westphalia, Baden-Württemberg and Lower Saxony, which is where approximately 60 percent of all highway traffic jams occur, the project implementation ratio is far lower still, namely between 22 and 34 percent. Trunk road investment falls below preeconomic crisis levels With effect from 2011, investment will fall again to even less than the 5-billion-euro mark and, according to the medium-term financial plan, will even fall short of prefinancial crisis investment levels for years to come. This is in the context of the unanimous view of traffic experts that approximately 7 billion euros needs to be budgeted annually to expand the federal trunk road network in line with requirements. It is true that, more than ever, the state has no option but to put its finances on a sound footing. But to believe that consolidation can be achieved through economies to the transport infrastructure is excessively short-term thinking: federal trunk road construction projects that have exhibited a cost/benefit ratio of as much as 3 or even higher will thereby be neglected. That means that each euro spent would generate three euros of economic benefit. Investments in federal long-distance highways in billions of euros Pre-crisis level is underscored (Reference) (Draft) 2011 (Plan) 2012 (Plan) 2013 (Plan) 2014 (Plan) Resources from the General Economic Package II Investments Sources: Federal Government, VDA

94 94 Tr a n s p o rt a n d i n f r a str u ctu r e p o li cy The VDA has therefore joined forces with representatives of the other modes of transport, transport associations and umbrella organizations and launched a concerted appeal to politicians to step up investment in the transport infrastructure in the context of the German parliament s budget discussions in September The needs-based investment level of 7 billion euros for the federal trunk roads could be ensured by using all the truck toll revenue amounting to 3.2 billion euros for roads, plus a proportion of the mineral oil tax revenue, just 11 percent of which would suffice. The hypothecation would be legally implementable without further ado in the form of multi-year contracts, for example, such as already exist for the railways. In 2011 the federal government is at least implementing the use of the full amount of truck toll revenue for financing federal trunk roads. For the first time, this establishes a closed road financial loop. Admittedly this will have no impact on the investment level, because at the same time the previously planned road budget is being reduced by an equivalent amount. More infrastructure for the euro Funds for federal trunk roads are not automatically allocated to the most economic projects We do not just need greater investment in infrastructure but also a more efficient use of available resources. Concentration, both geographically and time-wise, makes sense as roads only achieve significance and synergistic effects on traffic through their network connectedness. This would be facilitated by delaying and bringing forward committed resources. To that end, it would make sense to give the Transport Infrastructure Financing Company (VIFG) limited borrowing powers. An ongoing problem is that the funds are not used strictly in accordance with efficiency considerations, but rather based on state quotas. A possible remedy would be to separate federal and state powers. In this case, the federal government would have sole responsibility for the federal highways and the states, in return for appropriate compensation, would be given responsibility for their federal highways. That way, the federal government would have the most economic highway projects and each federal state would be able to implement its most economic federal highway projects. But both sides were unable to agree on this within the 2009 Federalism Commission II. A viable alternative for achieving greater efficiency in financing the construction of federal trunk roads would be to conclude a road Service and Financing Agreement (LuFV). To this end, there are relevant proposals on the table that would ensure greater efficiency, at least in maintaining and operating the federal trunk roads. Introduce infrastructure report Citizens would learn more about the benefits of the infrastructure they use Lasting efficiency improvements also require efficiency monitoring, namely an ongoing comparison between the resources deployed and the outcome achieved. In transport policy, this is expressed, for example, in traffic congestion hours, road surface quality or the safety quality of the infrastructure. Data on these matters does exist but is not collected and documented systematically or annually. Therefore, in conjunction with the organizations of the other modes of transport and the trade associations, the VDA suggested in 2009 that an infrastructure report should be published annually and presented a draft model. Not only would it be used by transport policy as a monitoring tool, but it would also create greater public awareness of the personal benefit of transport investment. This is to be recommended, especially in the context of the experience with Stuttgart 21 and citizens evident need for greater participation in, and education on, infrastructure issues.

95 95 Public Private Partnership for greater costeffectiveness Public Private Partnership models (PPP) can be one way of achieving more cost-effective infrastructure (A models, F models, Functional Construction and Maintenance Contracts). However, there is no evidence of PPP being systematically superior to conventional infrastructure financing this depends on individual circumstances. PPP models depend on individual circumstances Efficient use of the infrastructure Telematics The existing infrastructure s capability can be perceptibly enhanced by using telematic systems. They are used to collate traffic data, on the one hand, and to display traffic information about the highways, on the other hand. They optimize road use by means of speed restrictions and hazard warnings. They contribute to improved traffic distribution within the network by diverting traffic onto alternative routes. They regulate the convergence of traffic flows at highway interchanges, merging points and junctions, or open up the hard shoulder at peak times. Variable highway information contributes to superior traffic flow To date, more than 750 million euros of federal funding has been spent on building telematic systems within the federal trunk road network. An extra 40 million euros annually has been earmarked. In its autumn 2010 freight transport and logistics action plan, the federal government expressly emphasizes the importance of telematics in greater traffic efficiency and submitted a Road traffic telematics project plan 2015, in which it hopes to define the development requirement within the federal trunk road network in consultation with the federal states. The data collated by the public telematic systems are also used by motorists navigation systems. DAB is coming The provision of information for dynamic navigation is still not optimal. The technology currently used to import traffic data into navigation devices is UHF radio s RDS/ TMC. But its transmission capacity is limited, so that providing geographical traffic information is inaccurate, subject to time lags and often incomplete. The digital radio standard DAB+ will remedy this situation. Its transmission capacity significantly exceeds that of RDS/TMC. But so far DAB use has not taken off due to the lack of attractive programs for it. The long awaited lift-off now finally seems to have occurred in The public broadcasters previously unresolved financing questions have been resolved, allowing them to expand their range of national digital programs. An agreement including private broadcasters was also reached at the end of 2010 on developing a network for programs capable of being received nationally. The federal government is in the process of bringing forward a law to promote more rapid dissemination of digital radio. To this end, the broadcasting of analogue programs should finish by no later than This is welcomed by the automotive industry. Digital radio offers more and faster traffic information

96 96 Tr a n s p o rt a n d i n f r a str u ctu r e p o li cy National Field Trials with the Long Goods Vehicle For the globally networked economy based on the division of labor, smooth-running freight transport is a must. This is especially true for our country as a leading export nation. But our future mobility must be even more efficient: economical in its use of resources, quieter, safer, attuned to individual needs. That is why the goal must be to minimize the traffic-related impact on man and the environment. The growth in freight transport confronts all forms of transport jointly with great challenges Innovative commercial-vehicle concepts are environmentally friendly, efficient and safe By 2025 the federal government anticipates an increase in freight transport of at least 70 percent compared with 2004, with the growth in long-distance road freight transport even expected to exceed 80 percent. At the same time, there are increasing demands on environmentally friendly, safe and rapid transportation. In this context, continuous efficiency increases by all forms of transport are urgently required. Where they are used between logistic nodes, innovative commercial-vehicle concepts such as the long goods vehicle can make an important contribution to increasing road freight transport efficiency. These vehicle combinations, with an overall length of m and a weight of t in combined transport, are made up of individual modules in accordance with standard dimensions stipulated in the EU Council Directive 96/53/EC. They are therefore not just suitable for combined transport, contributing (in the context of co-modality) to better network integration of the different modes of transport; the different ways in which they can be combined also makes them extremely environmentally friendly and economical and they are easy on the infrastructure:

97 97 A given transport output is generated with fewer vehicles and lower journey volumes. Instead of 34 pallets, up to 53 could be loaded. The load volume increases from 115 m³ on average to as much as 160 m³. This means that in future two long goods vehicles will do the work of the three conventional goods vehicles on the road today. A significant increase in transport volume compared with conventional goods vehicles will be accompanied by lower fuel consumption and lower emissions. Previous pilot trials with the long goods vehicle show that the fuel economies achieved per metric ton or transport unit transported are between 15 and 30 percent. CO 2 emissions fall in proportion to the reduction in fuel consumption. As only two goods vehicles instead of three are now required for the same transportation quantity, the required road area falls. This relieves the burden on roads and cuts congestion. If long goods vehicles were to be permitted throughout Germany, approximately 20 percent of current journeys involving conventional vehicles could be transferred to the long goods vehicle. That equates to a traffic reduction of almost 8 percent. The use of long goods vehicles in pre-carriage and on-carriage to the combined transport (CT) terminals delivers a lasting improvement in CT profitability. Each efficiency gain in road freight transport as a result of long goods vehicles therefore also results in improved CT competitiveness. The Road layout directive (the turning circle regulation BO-Kraftkreis ), is observed using steered axles or dollies. This means that the long goods vehicle can negotiate bends, roundabouts and building sites safely and in accordance with the regulations. Road stresses (road surface wear, grooves) decline by approx. 30 percent compared with conventional vehicle combinations because the individual axle loading is reduced, while retaining the permissible gross weight of 40 t, which in the case of the long goods vehicle is spread across additional axles. The risk of an accident is reduced as long goods vehicles are required to be equipped with all the currently available active and passive safety systems and there are fewer goods vehicles on the roads overall. Other European countries have had positive experiences in the past with innovative commercial-vehicle concepts. In Sweden and Finland, combinations with a length of m and up to 60 t in weight have been in use for many years. The Netherlands and Denmark are currently conducting multi-year field trials. It has so far been possible to demonstrate significant savings in terms of numbers of journeys, fuel consumption and CO 2 reduction. There is also public acceptance. It cannot be ruled out that these vehicles will in future become an everyday sight on the Dutch and Danish road network, or that other countries will join in comparable large-scale trials. The long goods vehicle satisfies all the necessary German vehicle and traffic requirements and in scientific studies has already demonstrated its harmlessness in terms of its impact on the infrastructure, driving behavior and safety. Experiences with pilot trials are uniformly positive, not only as regards the potential transport economies, the environment and traffic safety, but also with an eye to cost-effectiveness and practicability. The next step has to be scientifically supported, large-scale field trials. This is the only way to create a comprehensive, statistical basis for deriving political decisions on the circumstances in which the long goods vehicle can be used at a national and subsequently EU level. Innovative commercial-vehicle concepts prove themselves in everyday European use Nationwide field trials can demonstrate the potential efficiency of the long goods vehicle and consolidate individual results

98 98 Tr a n s p o rt a n d i n f r a str u ctu r e p o li cy The Federal German Government has also recognized the potential efficiency of these commercial-vehicle concepts and is planning field trials with the long goods vehicle under the aegis of the Federal Transport Ministry. This will allow initial pilot projects with long goods vehicles to be supplemented and consolidated, enabling conclusions to be drawn as to vehicle efficiency and safety. Goods vehicle combinations weighing 60 t will not be included in the field trial. VDA supports the field trials as a partner in the innovative commercialvehicle initiative The VDA co-founded the Innovative Commercial-Vehicle Initiative (IIN) together with 17 other associations representing the transport and shipping sector. The IIN welcomes the nationwide trial operation involving long goods vehicles, as agreed by the Federal German Government, and has promised the Federal Transport Ministry it would make its technical expertise available to the project. At the same time, the VDA and the German Railways have entered into a constructive dialogue. The aim is to stimulate debate in Germany and Europe on transport policy and to increase the acceptance of new concepts. The focus is on the core concept of co-modality, whereby all the different modes of transport come into play individually or in combination, depending on their respective strengths. Nor must there be any vetoes on innovation in terms of developing transport systems, which also includes the long goods vehicle. A joint paper on the subject was first presented to the public at a VDA and railways press conference in June The paper also contains statements about increasing the size and weight of commercial vehicles and conducting a field trial involving the long goods vehicle. The VDA and railways have also defined common parameters for designing the field trial that have been submitted to the Federal Transport Minister, who has lent them his support. Given the growth in traffic and increasing demands for environmentally friendly and safe transport, greater efficiency in freight transport is of paramount importance. Long goods vehicles can make a considerable contribution to this objective thanks to their optimal use of cargo space. Germany as an exporting nation should exploit the potential that a moderate increase in the size and weight of commercial vehicles affords. New goods vehicles such as these are eco-trucks because they are helping to make road freight transport even more environmentally friendly. What is therefore required is an objective dialogue between all stakeholders on the potential, circumstances and prerequisites for the introduction of innovative commercial vehicles in Germany.

99 99 Liberalizing Long-Distance Bus Services in Germany The bus local transport top performer The bus is the backbone of the local public transport network (LPTN). It is the preferred means of transport for almost half of all journeys: its share of the traffic volume is around 46 percent. Approximately 2,850 private and municipal companies operate as service providers in the scheduled local public transport sector. Together, they carry more than 10 billion passengers a year. In the process, passengers travel 9.1 km per journey on average, meaning that the transport capacity is 93.5 billion person-kilometers and the journey volume 3.5 billion kilometers. Buses cover around 2.5 billion kilometers each year in providing these transport services. That makes the bus a mainstay of the LPTN. Thanks to their high degree of cost-effectiveness, buses can also provide low-cost and environmentally friendly, long-distance passenger transport services, especially up to a range of 400 km. Many years of experience in Great Britain, Ireland, Sweden and the USA, for example, demonstrate that a cheap and reliable alternative form of transport for consumers has established a foothold. Owing to legal restrictions, there are only a few long-distance scheduled bus services in Germany for example on routes to and from Berlin or as feeder routes to airports and railway stations. Scheduled long-distance bus services in Germany are still subject to restrictions Long-distance scheduled bus traffic is currently still subject to restrictions that have remained virtually unchanged since As such, scheduled bus services in Germany scarcely feature at all in long-distance passenger transport. The debate on the long overdue liberalization has, however, taken on a new dimension under the current federal government s coalition agreement to open up competition in the longdistance transport sector and thus advocate equal treatment between the different modes of transport. The VDA and its affiliated bus manufacturers welcome the Federal German Government s planned liberalization of long-distance scheduled bus services, and see it as offering considerable potential for the environmentally friendly and safe mode of transport that buses represent, as they are involved in only 1.2 percent of all road traffic accidents involving personal injury. Purely arithmetically there is only one passenger fatality per 5 billion vehicle kilometers traveled by bus. In relation to the distance traveled, the frequency of accidents involving buses has almost halved in Germany since Behind these facts lies a comprehensive bus safety package which, in addition to modern and sophisticated safety technology and intensive driver training, also includes government oversight of buses, companies and drivers. The bus is the top-ranking form of transport from a safety and environmental standpoint The bus is also the first choice from an environmental standpoint. Based on an average occupancy rate of 60 percent, the German Federal Environment Agency for coaches calculated a fuel consumption of 1.4 liters of diesel per person for 100 kilometers or 31 g of CO 2 per person and per kilometer. The railways come out at 46 g of CO 2 on a long-distance journey and converted for greater ease of comparison a fuel consumption of 2.5 liters of diesel. Taking account of all climate-related effects, aircraft come out at 365 g of CO 2 or fuel consumption of 5.6 liters of diesel. The bus s fuel consumption therefore makes it unbeatable, both from an environmental perspective and when it comes to carrying passengers over long distances. It therefore has the capacity to make an enormous contribution to achieving climate protection objectives.

100 100 Tr a n s p o rt a n d i n f r a str u ctu r e p o li cy The potential for long-distance scheduled services is high Long-distance scheduled bus services create greater mobility for all From a consumer perspective, there are also other reasons why opening up the market is desirable: this will make it possible to exploit routes that could not previously be served directly by rail. Liberalization is also a contribution to greater social mobility, because it will be possible to create new price alternatives on long journeys. The potential magnitude of long-distance scheduled bus services is shown by the successful operation of the Berlin-Hamburg route, carrying 400,000 passengers each year. According to studies, and depending on network density, long-distance scheduled bus routes in Germany could achieve a market share of up to 28 percent. Rail would account for around 20 percent, individual transport 49 percent and airplanes for less than 4 percent. A report written for the VDA by the transport expert Prof. Dr. Alexander Eisenkopf of the Zeppelin University in Friedrichshafen concludes that the reform should allow farreaching competition with as little government involvement as possible. Only then can a vibrant long-distance scheduled bus market come into being. What this requires is to provide bus operators, including small ones, with the help they need to enter the market and to ensure a level competitive playing field for small and mediumsized enterprises and the large transport groups. And although the bus can probably offer a seat-kilometer 50 percent cheaper than the railways, setting up the long-distance scheduled bus service will not be to the railways detriment because bus services quite deliberately concentrate on the price-sensitive customer segment, thereby attracting people who tend to use car-sharing agencies or who have, to date, refrained entirely from longer journeys on cost grounds. In the meantime the Federal Transport Ministry s draft bill for amending the German Passenger Transportation Act is available. The VDA, together with its affiliated bus construction companies, advocates genuine liberalization in order to carry out the will enshrined in the coalition agreement in a relatively straightforward way and not to involve government bodies in the bureaucratic role of awarding concessions. At the same time, the VDA is proposing to provide small and medium-sized bus companies with government funding from Kreditanstalt für Wiederaufbau (KfW Reconstruction Loan Corporation) to enable them to enter the long-distance scheduled service business, thus ensuring a level competitive playing field with the large bus companies.

101 101 The new bus brochure: buses safe and environmentally friendly Buses are the backbone of public passenger transport the world over. In urban and rural areas alike, without the bus, people would lose much of their mobility. Buses are unique in combining high quality and flexibility while offering a concept that is so tailored to each transport need. They have become environmentally friendly champions of innovation in the automotive industry whether coaches for going away on holiday in comfort or scheduled services for a safe, environmentally friendly and reliable journey to work or school. Buses were invented in Germany, and the German bus industry, vehicle manufacturers and bus operators alike continue to set global standards for the ultimate in cost-effectiveness and quality, technological leadership and environmental awareness. People in Germany use the bus more than five billion times each year. That makes buses the second most important means of passenger transport after cars. For more than 80 million passengers a year, coaches are also the people carrier for weekend excursions, club outings or holiday trips. By choosing the coach, travelers are opting for a high-tech form of transport, comprehensive comfort, well-trained drivers and relaxed travel. What we can say about buses, more than almost any other means of transport, is that it is there for everyone in the truest sense of the word. In addition to its high degree of flexibility and cost effectiveness, the predominant advantages of the promising means of transport that buses represent are journey quality, environmental friendliness and road safety. But buses often play second fiddle in debates on transport policy. The VDA has assembled the salient facts about buses in a new brochure. The idea is to raise awareness of the fact that buses are exemplary in every respect: in terms of cost-effectiveness, safety and climate protection. This image is gaining increasing traction. Buses, with all their strengths and advantages, should be enjoying increasing use especially in the country where buses were invented. The brochure is intended to pave the way.

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103 Environment, Climate Protection and Technology Swen Schraitle apprentice toolmaker, smk-systeme metall kunststoff GmbH & Co. KG, Filderstadt

104 104 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Innovations in Environmental Protection Automotive industry strikes the right balance between safety, cost effectiveness, utility and environmental protection The German automotive industry s capacity for innovation is highly beneficial to protecting the environment. For example, the industry has achieved substantial improvements in vehicle manufacturing, fuel consumption, vehicle emissions and the environmentally friendly reuse of vehicles in the form of recycling. This is the key to providing vehicles that perfectly match customers wishes for safety, cost effectiveness, utility and environmental friendliness. Continuing to strike the right balance between these objectives remains an important challenge. Of critical importance for a vehicle s whole-life environmental impact are the direct emissions during the use phase. According to studies they account for around 80 percent of the total environmental impact. This is why environmental protection measures prioritize the vehicle itself. Which is why it is the subject of a whole raft of different programs brought in by the automotive industry. The German Federal Environment Agency attested to the high level of environmental friendliness of modern spark ignition engines years ago. For example, the spark ignition engine s carbon monoxide emissions have been cut by more than two-thirds since the beginning of the 1990s and nitrogen oxide and hydrocarbon emissions by more than four-fifths. The clean diesel s emission reduction rates are even as much as 98 percent. Modern cars and trucks now have only a marginal impact on the environment thanks to the introduction of the catalytic converter, the reduction of refueling emissions, particulate filters and SCR systems. TREMOD, a computer model commissioned jointly by the German Federal Environment Agency and the VDA from the IFEU Institute in Heidelberg, provides striking evidence of this. For 2020, the model shows a reduction compared with 1990 of more than ninetenths for volatile hydrocarbons (HC), carbon dioxide (CO) and particulate emissions (PM) as well as three-quarters for nitrous oxides (NO X ). Major successes in emission reduction in road traffic: Particle emissions Units in kt/a Major successes in emission reduction in road traffic: NO X emissions Units in kt/a 40 1, , Cars, petrol-converted Cars, GCat Cars, diesel Other vehicles, petrol-driven Other vehicles, diesel-driven Cars, petrol-converted Cars, GCat Cars, diesel Other vehicles, petrol-driven Other vehicles, diesel-driven Source: IFEU Source: IFEU

105 105 In addition to the drastic reductions in pollution emissions, the German automotive industry has also significantly reduced fuel consumption and thereby CO 2 emissions. For example, road traffic CO 2 emissions, which peaked in 1999, are now even below their 1990 level, despite continued increases in vehicle movements. This is down to the successful innovation of German-branded new vehicles: between the end of the 1970s and today their fuel consumption has more than halved. This successfully decoupled fuel consumption and CO 2 emissions, on the one hand, and passenger and freight transport traffic movements, on the other hand. Falling emissions despite increasing traffic movements as a result of the German automotive industry s capacity for innovation This trend will continue with the introduction of new fuels and new power trains. The journey away from oil has begun. With an eye to the future, the German automotive industry has created the technical environment allowing the admixture of biodiesel to conventional diesel to be increased to 7 percent (B7) and of ethanol to gasoline to 10 percent (E10). The future will see vehicles with hybrid and electric drive and fuel cells coming to market as important planks of our forward-looking fuel-diversity strategy. This is an enormous change both technically and economically. The German automotive industry alone will invest between 10 and 12 billion euros within the next three years as a minimum in the development of alternative propulsion systems. At the same time present-day drive trains will continue to be developed. The two together add up to a considerable investment requirement. That is why no other industry in Germany invests more money in research and development than the automotive industry. In 2010, more than 19 billion euros were committed far more than in any other sector. Major successes in emission reduction in road traffic: HC emissions Units in kt/a Major successes in emission reduction in road traffic: CO emissions Units in kt/a 1,500 8,000 1,200 7,000 6, ,000 4, , ,000 1, Cars, petrol-converted Cars, GCat Cars, diesel Other vehicles, petrol-driven Other vehicles, diesel-driven Cars, petrol-converted Cars, GCat Cars, diesel Other vehicles, petrol-driven Other vehicles, diesel-driven Source: IFEU Source: IFEU

106 106 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Germany leads the way in car recycling technology The automotive industry also has an eye on the end of the vehicle s life in terms of end-to-end product responsibility. Nowadays cars can be almost entirely recycled thanks to new concepts. As the innovations and processes in question were first applied in the German automotive industry, it is we who lead the way in this technological arena. Moreover it is the German automotive industry with its factories, which leads in terms of environmental protection. Behind it all is a paradigm change. In the past, endof-pipe technology did not capture unwanted residues until the end of the process chain. Nowadays we employ integrated processes, which minimize waste products such as these from the outset. The upshot, for example, is that the manufacturers entire car production waste for one vehicle has been reduced to the volume of one cleaning bucket. Also, nowhere in the world does car production recycle water more times, thus saving on natural resources. Wastewater and waste gases are being cut ever further. Dr. Dagobert Achatz, Director of Company Environmental Protection, Audi AG (Chairman of the Environmental Management Committee) The examples illustrate the German automotive industry s closed-circuit concept. This creates the necessary conditions for embarking on a new sustainability. This must not be reduced to the ecological context, because sustainability (a forestry concept that is some 300 years old) is more than that and includes taking a balanced view of ecology, the economy and social aspects. High environmental and occupational safety standards, technological competence and management know-how are also applied in foreign locations. The German automotive industry is thereby making its contribution to making future mobility affordable, environmentally friendly and sustainable in a way that satisfies the demands of the globalized economy and each individual person alike. The German automotive industry aims to make cars as environmentally friendly as possible. Guided by this principle, the Environmental Management Committee deals with the technical and legal conditions related to company environmental protection. The circular environment concept Production Use Design The circular environment concept of the automobile industry Recycling Source: VDA

107 107 Climate Protection: German Brands Make Progress in Avoiding Emissions In 2010, German manufacturers reduced the CO 2 emissions of their newly registered cars in Germany by 3 percent, thereby making yet another contribution to protecting the climate. That means that in the past four years German manufacturers have reduced the CO 2 emissions of their newly registered cars in Germany by 13 percent, from g CO 2 /km in 2006 to g CO 2 /km in This progress is especially remarkable because in 2010 the proportion of newly registered upper-class and upper-middle-class cars again rose significantly compared with the environmental bonus year According to official Kraftfahrtbundesamt (Federal German Motor Transport Authority) figures, newly registered German-made cars in 2010 exhibited lower CO 2 values on average in all ten segments from the small car to the large MPV than imported brands. The German automotive industry s positive CO 2 track record German Group brands managed to achieve considerable CO 2 reductions, especially in the newly registered company car sector. Their CO 2 emissions fell by 4.8 percent in That means that the average German-branded company car emitted less than 156 g CO 2 /km. Improvements in emissions continued in the first quarter of As a result, the average CO 2 value of new, German-branded, domestically registered cars was g/km. That is a fall of 4.3 percent compared with the year before, which now puts German manufacturers just above the average value for all cars, which was g/km (-3.8 percent). German manufacturers already offer more than 300 models across all segments with CO 2 emissions of less than 130 g/km. This equates to fuel consumption of approximately 5 liters per 100 kilometers (56 mpg imp.). The number of these models has thus almost quadrupled in the past two years. German manufacturers are therefore well on the way to achieving the ambitious EU targets for 2015 based on efficient fuel-saving technology. CO 2 emissions from German road traffic Units in 1000 tons 175, , , , , , , , Source: UBA National Inventory Report 2011

108 108 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Only Germany has managed to reduce its CO 2 emissions from road traffic since 1990 The German automotive industry s efforts on behalf of climate protection are paying dividends for mankind. Despite the increase in traffic growth, made more acute by Germany s central location in the heart of Europe, CO 2 emissions from road traffic in Germany fell by more than 31 million metric tons between 1999 and 2010, according to the national inventory report conducted by the German Federal Environment Agency. Since 2006, CO 2 emissions from road traffic have been lower than 1990 levels for the fourth year in succession. That confers a special status on German road traffic within the EU 15, no other West European country having managed to reduce its road traffic CO 2 emissions below where they were in This is also evident in the development of cars specific energy consumption. Nowadays, fewer than 13 megajoules per 100 km are required. In 1990 more than 32 megajoules were required for a comparable performance. Manufacturers and suppliers have even gone up a gear. As a leading innovator, the sector has set itself the ambitious goal of offering CO 2 -efficient solutions for all models. This can be seen from the Federal Motor Transport Authority s official figures: German-branded models in 2010 averaged lower CO 2 emission values than their competitors in all ten vehicle segments from the smallest cars to the family MPV. Hans-Jürgen Hahn, Vice President Engineering Services, MAN Truck & Bus AG (Chairman of the Technology, Safety and Environment Committee) Automotive engineering makes a decisive contribution to sustainable road transport with systems for vehicle safety, and for the protection of environment and climate. However, the necessary rules for their approval should apply worldwide and should be supported by cost benefit analyses. Development of the specific energy consumption of road traffic Units in MJ per 100 person-km Source: Energy Balances Joint Project, 2010

109 109 Spark Ignition and Diesel Engines Combustion engines: still considerable scope for efficiency The conventional combustion engine underpins continuing increases in efficiency and reductions in consumption and emissions. There are a number of factors why the combustion engine is still so successful more than one hundred years on: The combustion engine has been a successful model for the past 125 years 1. The combustion engine is clean Since the introduction of European emissions legislation at the beginning of the 1990s, the combustion engine has gradually been improved. The spark ignition engine was fitted with a highly efficient catalytic converter; diesel vehicles uniformly feature a diesel particulate filter, which has transformed the engine into the clean diesel. The diesel s particulate emissions in particular have already declined by a total of 98 percent since the introduction of Euro 5 compared with the first Euro 0 standard. With Euro 6, the diesel s pollution level is approaching that of the spark ignition engine, renowned for its cleanliness. Development of exhaust gas stages of diesel cars CO [%] % PM [%] % HC + NO X [%] Euro 0 23 Euro Euro 2 Euro 3-97% Euro 4 Euro 5 Euro 6 Source: VDA

110 110 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Diesel engine achieves the spark ignition engine s low level of emissions but the EU is standing in the way of rapid market penetration Euro 5 has been in force across the board since the beginning of But the next emissions level, Euro 6, is just around the corner. Admittedly, Euro 6 will not be binding on new models until September 2014, but our manufacturers are ready for it and are the first in the world to be already offering Euro 6 vehicles. These vehicles are equipped not just with a particulate filter but also, for the first time in a car, with a special NO X aftertreatment system to reduce nitrogen emissions yet further. This technology will be required to achieve the step change reduction in nitrogen from 180 mg/km to only 80 mg/km in future be it the DeNOx storage catalytic converter or the SCR technology already familiar in modern goods vehicles. Both NO X aftertreatment systems are capable of cutting the engine s already low nitrous oxide emissions by a further 60 to 80 percent, such that under Euro 6 the diesel s level of nitrous oxide emissions will be substantially the same as that of the gasoline engine. However, despite the European Commission s announcements, the implementing regulations for certifying Euro 6 vehicles have still not been completed. This is holding up the certification of Euro 6 vehicles. The victims are customers and the environment. Without the regulations, Euro 6 spark ignition cars cannot be certified at all and diesel cars final Euro 6b stage cannot be certified, although the technology has been developed and is ready. The rapid penetration of these cleaner vehicles into the vehicle stock desired by all sides is therefore being delayed by the absent regulations. The automotive industry is therefore calling on the regulations to be completed as quickly as possible. 2. The combustion engine is efficient Our CO 2 track record proves the point. Our drivetrains are already highly efficient. In the past three years alone, a more than 10-percent reduction in the average fuel consumption has been achieved in a German-branded vehicle s conventional combustion engine. With the help of other innovations, we will achieve further fuel economies with both the gasoline and diesel engines. These measures are the fastest and cheapest technologies for effectively reducing CO 2 emissions and they are already at work. The combustion engine-driven car is also the basis for generating the considerable investment resources for electromobility and other alternative drivetrains. The individual qualitative development stages for the gasoline and diesel engine include: engine-internal measures (smaller size for the same power), direct injection, optimizing the auxiliaries, e.g., the generator ( alternator ) downsizing the cylinders for the same power output, optimizing the energy management, fully variable valve control and, in the case of the diesel, exhaust aftertreatment hybridization = electrification of the combustion engine and all of its auxiliaries

111 111 As regards the combustion engine whether diesel or gasoline we see further longterm potential economies of approximately 25 percent. Together with hybrid drive, this increases to as much as 40 percent. 3. The combustion engine is comfortable Thanks to its efficiency and low fuel consumption, a combustion engine (and the diesel engine in particular) achieves ranges in excess of 1,000 km on a full tank. The modern combustion engine is suitable for everyday use from below -25 C to above +40 C; life expectancies of several 100,000 km are the norm. The modern combustion engine is also characterized by low noise emissions, high torque and high responsiveness. 4. The combustion engine has potential for the future Of course the development of the diesel and gasoline engines is not static; both are converging with one another in terms of combustion engine technology. Our engineers objective is to make the diesel as clean as the gasoline engine and the gasoline engine as economical as the diesel. One of the developers most fascinating challenges at the moment is to control the compression ignition in a spark ignition engine in a stable manner across all operating ranges. The diesel is becoming as clean as the gasoline engine and the gasoline engine as economical as the diesel New biofuels will complement the increased efficiency of the combustion engine. All modern engines are capable of operating with a 10-percent ethanol admixture (E10) or a 7-percent biodiesel admixture (B7). New biofuels such as hydrogenated vegetable oils or biomass-to-liquid (BtL) are capable of boosting the biofuel element in the fuel to more than 20 percent. This is the way to develop mobility in a post-fossil fuel age one step at a time. Successful measures with conventional combustion engines for CO 2 reduction Fuel savings with petrol and diesel engines % -25% -40% Conventional engine arrangement, without further technical innovations Current engine innovations Currently under development Additional efficiency potential: engine + hybrid Source: VDA

112 112 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Alternative fuels The objective is the long-term replacement of fossil fuels Biofuels a way of reducing road traffic CO 2 emissions In the long-term, the German automotive industry s fuel diversity strategy includes the replacement of fossil fuels in order to become more independent of crude oil and to cut CO 2. This substitution is an ongoing process. Alternative fuels and drivetrains are progressively being developed and becoming more prominent. Biofuels are part of this fuel diversity strategy. From a short- and medium-term perspective, biofuels such as ethanol, biomass-to-liquid (BtL) or bio natural gas are currently the only option compatible with modern day mobility for using renewable energy in the transport sector, and on a large scale as well. The German automotive industry sets particular store by a compatible admixture with fossil fuels. Meaning that biofuels must be able to meet the needs of modern clean engines and not the other way round. This means for example that pure biodiesel is incompatible with modern engine technologies. Ultimately the technological criterion in using fuels is fuel quality. That being so, it is currently possible to achieve up to a 7-percent admixture of biodiesel to conventional diesel (B7) while complying with the required fuel quality. In addition, a large proportion of the vehicle stock and all new vehicles are capable of operating with a gasoline fuel containing a 10-percent ethanol admixture (E10) in compliance with DIN Other biofuels, such as hydrated vegetable oils (HVO) for example, can already be added to diesel at a concentration in excess of 20 percent. This means that Germany already uses more biodiesel than any other country in Europe. With these admixture concentrations, the future biofuel ratio target of 6.25 percent is achievable in energy terms. The German automotive industry supports the biofuels strategy The German biofuel strategy is enshrined in the Biofuel Quota Act. The act sets quantitative quotas for the quantities of biofuels for sale by way of admixture. Failure to meet the quotas will result in statutory fines. This sanction mechanism is intended to ensure that the quota is met. The German automotive industry supports Germany s biofuels strategy and in particular the net principle envisaged by the federal government with effect from 2015, whereby a purely quantitative target for the fuel admixture quota, the biofuel quota, will be replaced by a CO 2 reduction target by From 2015 onward the biofuel quota will be replaced by a CO 2 reduction quota rising to 7 percent by In order for this quota to be achieved by means of admixture, the biofuels in use by 2020 must exhibit improved CO 2 performance. The targets will then no longer focus purely on the quantity of biofuels sold but on the CO 2 reductions that can be achieved through biofuels. The first step will be to require a minimum CO 2 reduction of 35 percent. This will be progressively raised.

113 113 The VDA advocates a technologically neutral approach. Biofuels should be rated equally according to their fuel quality and their CO 2 reduction. Preferential treatment for individual biofuel types based on market policy alone is rejected. This is also why the VDA is against preferential treatment for biodiesel relative to HVOs and opposes the currently permissible 3 percent quantitative ceiling on HVOs. Second-generation biofuels represent a significant improvement in terms of their potential contribution to sustainability. They are able to reduce not only CO 2 emissions by up to 90 percent but also particle emissions by up to 30 percent, as well as cutting carbon monoxide and hydrocarbon emissions by as much as 90 percent. A further advantage is that they are compatible with the predominant vehicle technology and fuel infrastructure, both now and in the future, and as such satisfy the EU sustainability criteria of biofuels that count double. It also puts paid to the fuel tank versus dinner plate debate of the past. Large-scale investment is required for 2nd generation biofuels However, these improved future biofuels, especially biomass-to-liquid and secondgeneration bioethanol, are not a guaranteed success. Production of these fuels requires investment of several 100 million euros per plant. But the production of BtL is economically more expensive than the production of biodiesel, for example. Therefore in order to put these biofuels on a competitive footing with other conventional biofuels, appropriate fiscal arrangements are required that leverage the advantages of second-generation biofuels, especially in terms of CO 2 reduction. Second-generation biofuels are set to complement first-generation biofuels to a greater extent by The appropriate framework therefore needs to be created that fosters the continued development of conventional biofuels. New investment in biofuels requires secure long-term investment over a period of between 10 and 20 years. It is still an unresolved question as to whether second-generation biofuels will pull off the hoped-for market entry owing to high investment and technology costs. The VDA emphatically advocates extending beyond 2020 the current tax exemption for second-generation biofuels that merit particular support. The preferential treatment of the biofuels meriting particular support currently expires in This being so, the required investment is currently not taking place.

114 114 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy E10 biofuel Approximately 99 percent of Germanbranded vehicles can accept E10 The introduction of gasoline containing up to 10 percent ethanol (E10) is part of the national implementation of European climate protection requirements. In this context, we can refer to the EU s Renewable Energy Directive and Fuel Quality Directive: The Renewable Energy Directive prescribes a minimum 10 percent share of renewable energy in the transport sector by Given the objective s short timescale, biofuels will have to shoulder the main burden. The Fuel Quality Directive governs emissions-related fuel parameters. It was in this context that the introduction of E10 was described. These requirements were implemented in Germany by means of the 10th Federal Immission Control Directive (BImschV). It stipulates that everywhere that gasoline containing a proportion of up to 5 percent ethanol (E5) is available, the corresponding E10 fuel must be offered as well. The de facto requirement of the quota guidelines under the Biofuel Quota Act is that E10 is to become the new standard fuel. The overwhelming majority of German motorists can fill up with E10 without a second thought. Approximately 99 percent of all gasoline-driven, German-branded cars on our roads are compatible with E10. All manufacturers have published the exceptions. This information has been collated in the DAT s compatibility list ( Our statements in this list are binding, motorists can depend on it. The consumer s statutory rights apply of course to E10 as well. German manufacturers have many years of positive experience with E10 abroad The German automotive industry stands by the quality of its products. It has thoroughly checked its vehicles compatibility with E10. It also already has years of experience outside Germany with the use of fuel containing ethanol, for example in Brazil, France and Sweden. Manufacturers information about the E10 compatibility of all vehicles is available from their dealers, in workshops, on websites and via telephone hotlines. This information, collated in the DAT list, was also made available to gas stations. For the German automotive industry, the admixture of ethanol is one step on the road away from fossil oil. E10 s critical advantage is that the CO 2 reductions kick in immediately throughout the entire gasoline-driven fleet on German roads. If all E10 compatible vehicles actually filled up with E10, this would avoid more than 2 million metric tons of CO 2 each year.

115 115 Vehicle noise The VDA sees the reduction of traffic noise as one of the major environmental protection tasks. Vehicle noise is an important factor in this. To this end, the automotive industry has promised its support if it can be guaranteed that implementing technical measures will have a measurable effect on traffic. The test techniques have already just recently been fine tuned so that they are a closer approximation to vehicles real noise emission behavior in urban traffic. Following a three-year monitoring phase within the EU, sufficient data is now available to introduce the new mandatory test procedure. New test procedure is more realistic Owing to technical progress, the subdivision by vehicle category that has existed for decades in the noise regulations will also have to be amended. This needs to differentiate not just by noise emissions but also by concepts, as individual vehicle categories offer different technical potential for noise optimization. The introduction of the new measuring procedure requires alteration of the existing numerical limits. In the past two years, the monitoring phase data was analyzed and assessed on behalf of the European Automobile Manufacturers Association ACEA. The new equivalent values for cars and light commercial vehicles fall within a range of 72 to 75 db (previously 74 to 78 db). For buses and larger commercial vehicles, the range is between 76 db and 82 db (previously 77 to 80 db). For off-road vehicles, there is an increase of 1 to 2 db. The new emission values and classifications are intended to ensure that the traffic noise situation remains unchanged. As a consequence, approximately 10 percent of all vehicles require immediate technical attention. As a first step, the VDA is proposing the prompt application of the new measuring method with the new vehicle subdivisions and associated noise limits. One in ten vehicles immediately affected by new noise limits In a subsequent step, noise pollution can be reduced by reducing the noise limits. That requires changes to vehicle concepts on a broad front along with necessary development work to define technical measures in terms of function, durability and safety. The necessary timescales need to be considered in defining future numerical thresholds. External constraints should not be overlooked either when defining more stringent external noise requirements. This is how propulsion concepts and combustion processes change as a result of the constant evolution of the legal framework, especially in the exhaust emissions and fuel consumption arena with a direct impact on vehicle noise emissions. The constant improvement in safety standards also imposes technical limits on the selective reduction in noise emissions. Unlike other environmental disciplines, noise emission is not just an undesirable environmental pollution factor. It also provides information with a contribution to pedestrian and other road-user safety that should not be underestimated a fact that needs to be considered when developing electromobility. Vehicle noises can also reduce hazards Noise abatement with a sustainable environmental effect primarily requires the inclusion of all direct and indirect noise abatement measures, such as the improvement of road quality, traffic infrastructure and management, town planning and effective monitoring of compliance with existing noise regulations.

116 116 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Hybrid Technology Hybrid technology combines the advantages of the conventional combustion engine with those of electric propulsion Hybrid drives are an important component in the German automotive industry s strategy for sustainable mobility. They combine the advantages of combustion engines, such as quick refueling and long range, with those of electric propulsion, from the recovery of braking energy to zero-emission driving. Especially in inner city traffic, the combination of electric and combustion engine propulsion can deliver fuel economies in excess of 20 percent. The key component is (as is also the case with the all-electric car) the energy storage system. German manufacturers are among the technical pioneers, using as they have the highly efficient lithium-ion battery since October 2007, the first in the world in a production vehicle. Hybrid drive is to be encountered here in different development stages: from the micro-hybrid with stop-start function and intelligent energy management, the purpose of which is to save as much fuel as possible with the least possible additional effort, through to the full-hybrid, which, with its powerful electric motor and large battery, is able to exploit all the degrees of freedom of increasing efficiency and can even cover limited distances on electric power alone.

117 117 The plug-in hybrid, on the other hand, is a particular variant of the full-hybrid. With the ability to recharge the battery from an external source, it closes the gap between the conventional vehicle and the electric car. The electric drive in the plug-in hybrid can therefore be used to support the combustion engine as well as for driving independently within the limits of its technical configuration. But hybrid drive is not just of interest for the car. It is particularly advantageous where irregular driving profiles and dynamic driving are the norm, for example vans in citycenter use and scheduled buses characterized by constant stopping and starting and short journey intervals. This is where the hybrid s ability, among others, to recover braking energy enables it to exploit its potential to the full. What is important if hybrid drive is to penetrate the market in these areas is that there is a business model available for the operator, such as courier services, municipal utilities or transport services. With current hybrid components, there is the opportunity for a profitable solution. This is why German bus manufacturers are already supplying production-ready hybrid solutions for the market as a whole. With goods vehicles as well, the German automotive industry is increasingly looking to hybrid drive. These goods vehicles are typically designed such that the additional electric motor is located between the clutch and transmission. In this way, the goods vehicles can be driven either by the diesel or electric motor or by both simultaneously. Driving on electric power is proving to be a major advantage, especially in urban traffic. When hybrid goods vehicles are driving on country roads at a constant speed, then the vehicle is driven by the combustion engine alone. Hybrid drive is also advantageous for vans and urban buses Additional electric motor also of interest to goods vehicles in urban traffic Hybrid buses from MAN Nutzfahrzeuge Units as percent Savings on fuel consumption Inner city Outskirts Urban/overland Other influences: Hybrid concept Topography Driver Share of ancillary equipment energy consumption Passenger occupation Traffic flow/management Source: MAN

118 118 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Electromobility A Long-Term Option for Cars and Light Goods Vehicles The automotive industry faces challenges from dwindling oil reserves, climate protection and increasing urbanization The current and future challenges for individual mobility are many and varied. Foremost among them are increasingly scarce fossil energy sources, climate protection and the concomitant need to cut CO 2 emissions as well as increasing global urbanization with hotspots in Asia, Africa and Latin America. The need for individual mobility in confined areas, especially in Asia, is growing at breakneck speed. Innovative mobility concepts must answer the questions as to how global CO 2 emissions can be reduced yet further, notwithstanding increasing traffic volumes, and how the accompanying increase in noise is to be countered. There is no way around the development of alternative drivetrains. This means that, in addition to the continued optimization of the combustion engine and the use of alternative fuels, in the long run electromobility is a key critical component in future mobility. Electric vehicles can be subdivided into the following types: BEV: Battery Electric Vehicle, a purely battery-powered vehicle PHEV: Plug-In Hybrid Electric Vehicle, a full hybrid with mains-rechargeable battery REEV: Range-Extender Electric Vehicle, vehicles with an electric motor as the primary means of propulsion and a small combustion engine, which can be used to recharge the battery while driving FCEV: Fuel Cell Electric Vehicle Based on the current German energy mix, all-electric cars (BEVs) already emit less CO 2, with regard to the energy chain as a whole ( from borehole to tire ), than comparable conventional vehicles. If electricity from renewable energy is used for charging, they become virtually zero-emission vehicles. When being driven, electric vehicles, irrespective of the energy mix, are always zero-emission vehicles. In electric driving mode, the same applies to PHEVs and REEVs. In electric driving mode, all types also emit less local noise and no particulates compared with conventional vehicles. The entire German automotive industry is straining every sinew to push this development forward. Its ambition is to retain its technological leadership. The National Platform for Electromobility: tasks and objectives The goal is for Germany to become the leading provider and market for electromobility At the invitation of the federal government, the National Platform for Electromobility (Nationale Plattform Elektromobilität NPE) brings together representatives from German industry, science, politics, trade unions and society. The NPE s members have agreed on a systematic, market-orientated and technologically open approach with the objective of developing German industry, together with small and medium- enterprises and the craft-based industries, into a leading provider, and Germany into a leading market, for electromobility.

119 119 May 3, 2010: Kick-off of the National Platform for Electromobility at the Brandenburg Gate with Federal Chancellor Angela Merkel, Federal Ministers Peter Ramsauer and Annette Schawan, and representatives of industry. The exhibition was organized under the auspices of the VDA, together with the Federal German Government s Joint Electromobility Unit (GGEMO) and the federations BDI, BDEW, BITKOM, VDMA, VCI, VKU and ZVEI. It exhibited the whole spectrum of electromobility value creation. The goal is for one million electric vehicles to be on German roads by Under the NPE s auspices, seven working groups are drawing up recommendations for ensuring that the objectives set are achieved: WG1: Driveline technology WG2: Battery technology WG3: Charging infrastructure and network integration WG4: Standardization and certification WG5: Materials and recycling WG6: Training and qualification WG7: Market environment Since its creation on May 3, 2010, the NPE has drawn up the interim report presented in November. This concludes that a two-thirds reduction in the cost of driveline components is required by 2020, while simultaneously increasing volumes. Opportunities for German companies are seen in the traction battery market. The supply of electricity from renewable energy sources is secure; electromobility can contribute to integrating volatile renewable energies. Cutting the charging time, coupled with intelligent network integration, appears both possible and worthwhile. Innovative materials and concepts need to be developed if electric vehicles are to be competitive. Standardization across sectors is seen as necessary and time-critical. The excellence of teaching and research and professional training must be ensured. The seven working groups results and projects that they have identified are to be documented in technology roadmaps. A competitive, systemic electromobility competence arises from the interplay between the electric vehicle and the generation and distribution of electricity, energy storage and charging technology, and communication technologies.

120 120 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Technical challenges en route to electromobility The battery plays a key role for the electric car The battery The battery, including its individual elements and materials, is a key component for electromobility. Batteries with a high energy density, without any functional limitations and capable of a broad range of applications, are the necessary prerequisite for the commercial viability of the various electric driveline concepts. It is essential to look at the battery as a system. Technical development of the components, from the cell via the control and monitoring electronics to cooling and casings, is to be pursued as a whole. Lithium-ion cell-based battery concepts are currently leading the innovation battle thanks to their specific attributes. Reducing cost, weight and space, while at the same time enhancing energy density, improving battery life and optimizing charging speed, are indispensable and drive forward further development. Concepts based on different cell components and cell types are being researched as the basis for future vehicle generations. An intensive and broad-based development in the sphere of cell components, such as cathodes, anodes, electrolytes, separators and cell casing, is underway with the goal of exploiting their respective optimal capabilities. Systems with 5 volt cells, with adapted cell chemistry up to and including lithium solid fuel cells, are considered to be particularly promising in the medium to long term. Further development is required in order for batteries to be used as storage systems within the energy network Together with the technical development of the battery and its elements, the development of production technology plays an important role. Industrialization, from the cell to the battery system, must run in parallel with technological development to satisfy the international competitive situation. An energy network with the vehicle as one element of the energy storage solution also requires further development in terms of the battery behavior and resulting bidirectional charging performance.

121 121 No electromobility without battery transport The transport of lithium-ion batteries is subject to extensive, international standardized regulations on the carriage of dangerous goods Among other things, they define requirements in terms of packaging, transport documents, the labeling of shipped items and vehicles, safe handling during transport and test and certification regulations. Quick and efficient global logistics networks for the production and servicing of batteries will also be critical to the future of electromobility. Because of excessively onerous risk assessments, the transport by air of large, lithium-ion batteries with a gross weight exceeding 35 kg is currently only possible at the cost of considerable extra red tape and time. Transporting large depleted lithium-ion batteries, for example for quality assurance purposes, recycling or disposal, is also formally largely out of the question. Regulations only exist for smaller depleted batteries, especially as they relate to transport in the context of the collection and disposal of household batteries. As a rule, the safety of lithium-ion batteries for vehicles is demonstrated by transport, electric and crash tests. Transport safety is subject, for example, to tests and requirements described in the UNO s Manual of Tests and Criteria. This fact is faced with impractical regulations that are at variance with the state of the art and have not kept pace with developments in risk assessments. There is an urgent need for action here. The regulations for the carriage of dangerous goods by all modes of transport are collated in the United Nations recommendations (UN Model Regulations on the Transport of Dangerous Goods) and updated every two years. These regulations are adopted by international legal agreements or national regulations and complemented by regulations specific to particular means of transport. The amendments put forward by experts must be incorporated in relevant legal standards in order to safeguard the logistics networks. Only then will it be possible to easily transport batteries within the context of a viable electromobility concept.

122 122 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy The charging infrastructure Charging using the domestic socket is fundamentally possible An efficient charging infrastructure is indispensable for the efficient use of electric vehicles. It is necessary to differentiate here between private, public and semi-public charging infrastructure. When charging at home ( home charging ) the car is charged over an extended period usually overnight using the domestic mains supply. Charging from conventional sockets (230 V, 16 A) is fundamentally possible and takes several hours depending on the battery capacity. Rapid charging is only required in exceptional circumstances. When using 400 V sockets in the domestic context, charging capacities up to a maximum of 22 kw are conceivable subject to a corresponding reduction in the charging time. In future, special domestic charging stations ( wall boxes ) will be able to ensure controlled, convenient and safe charging. In this context, the German automotive industry is expressly advocating smart charging, namely charging without any restrictions on mobility involving the optimal integration of renewable energies. For public or semi-public charging stations (e.g., at supermarkets), particular requirements apply in terms of safe operation, protected access, authorizing the charging process, measurement and billing as well as vandalism. When charging using alternating current, charging capacities of up to 44 kw are technically feasible in the period of interest up to 2020, sufficient to recharge a sensible quantity of electricity within 20 minutes. Charging using direct current is a promising alternative for opportunity charging in the public arena Wireless induction charging is a potential future technology Direct current charging ( DC charging ) is an alternative to alternating current charging, especially at higher charging capacities. This is especially so for quick opportunity charging at public charging stations. With DC charging the primary advantage is the smaller size of the connecting cables, making for greater ease of handling. Direct current charging also means that the rectifier required for transforming the electricity is no longer located in the vehicle but in the charging station. From the German automotive industry s perspective, wireless induction charging of a stationary vehicle is a future technology with potential. Automation and the ability to dispense with the cable make for significantly greater convenience. The ability to transmit power wirelessly has been demonstrated for typical car ground clearances in the 3 kw power range. Operating efficiencies of at least 90 percent are deemed possible. But the search for customer implementations in the vehicle has only just begun with the projects being supported under the KOPA II economic stimulus package. From the present day perspective and until further notice, induction charging is seen as a complement to cable-based charging.

123 123 Standardization: battery systems, cell dimensions, charging stations, connectors Standardization is playing an important role in the introduction of electromobility. When correctly applied, it can become a catalyst for future-orientated technologies. There is a great need for standardization, especially at the interface for charging up electrically powered vehicles at the energy supplier s network. Besides the safety of the charging procedure, one basic condition for the success of electromobility is the standardization of the power connection needed for the charging process by means of a cable and connector as well as the creation of an appropriate communication link. There is a need for standardization, especially at the interfaces between the electric car and energy suppliers Another challenge is that various industrial sectors, such as the auto industry, the electric industry and energy suppliers, are working closely with one another on standardization for the first time. The federal government has recognized this and has set up a special working group, the AG4 Standardization and Certification, within the National Platform for Electromobility (NPE). The Automotive Technology Standards Committee (NA Automobil), supported by the VDA, coordinates all standardization activities relating to electromobility. While vehicle-related standardization can be carried out as far as possible in its own right, close cooperation is necessary on all standards involved in the network connection and communication for charging electric vehicles. In this area, NA Automobil is taking over coordination with electrical standardization, which the German electrical commission DKE is overseeing. Last year, numerous joint working groups emerged, primarily dealing with interface issues. Working groups for standardization, NA Automobil and DKE Business Unit for Electric Mobility in DIN DKE EMOBILITY (DKE/NA Automobil) NA Automobil K 353 (TC69) Electric road vehicles EMOBILITY AG10 Consideration of systems for the energy supply of electric vehicles NA AA Electrical and electronic equipment AK Contact-free charging of electric road vehicles EMOBILITY AG20 Requirement for the electrical safety of the mains/vehicle interface NA GAK Communications interface from vehicle to electricity mains (VSG CI) AK 542.A.1 Plug-in devices for capacity-related mains connection of road vehicles EMOBILITY AG30 Standardization roadmap for electromobility NA AA Electrical road vehicles AK Protection devices for e-mobility NA GAK Electrical safety and mains interface AK Consideration of systems for the connection of electric vehicles NA GAK Measurement of capacity and consumption NA GAK Energy storage media Source: VDA

124 124 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy For the auto industry, standardization mainly has an international orientation. As a sector that operates globally, the auto industry needs the same rules, norms and standards worldwide in order to keep the expense of adapting their products as low as possible. For this reason, the activities of NA Automobil are especially focused on European and global standardization issues. The importance of international standards is rooted in the fact that many developing countries, particularly China, tend to orientate themselves to the international ISO and IEC standards rather than to the European UN ECE guidelines in the definition of their registration requirements. As an expert partner, NA Automobil remains at the disposal of industry experts for guidance through the complexity of the nationally and internationally interwoven standards authoritie (see Figure below). The battery system for electric cars must also be standardized In 2011, the battery system is a major standardization concern in the electric-car field. As a result, work on uniform battery test rules (ISO 12405) has pressed ahead. The existing package of standards is being rounded out with another standard on safety requirements. With an eye to comparability, changeability and cost reduction, the auto industry is calling for uniform dimensions for lithium-ion cells in the powertrain battery systems for electric cars. In this regard, the DIN Spec forms a first foundation on a national level. In the future, the specification is expected to become an international standard. Joint working groups for standardization between NA Automobil and DKA Regional National International standardization German Institute for Standardization Sectors Development Construction Service Information technology Aviation Medical technology Measuring technology Electrical engineering Telecommunications Source: DIN

125 125 The consensus-building is not yet over in the Europe-wide decision on uniform standards for the plug connector to link electric vehicles to the network. But there is the greatest possible consensus within Germany. Together with its partner associations in electromobility (BDEW, VDE and ZVEI), the VDA has adopted a corresponding position paper for the establishment of the uniform connection system for Europe, designed to accelerate the agreement process. Currently, the manufacturers of the plug devices are primarily leading the discussion, and not the users of these plug devices, as would objectively be the case. Besides these prominent projects, other important issues are looming in the future. The German Standardization Roadmap has been developed with active cooperation within the activities of the NPE s AG4. The figure below offers an overall view of the subjects according to their importance for market introductions and their place in time. Topic areas of the Standardization roadmap International cooperation / Liaison with other organizations International nature of standardization Charging stations Electrical safety HV on-board network Battery safety Inductive charging Vehicle/systems Functional safety External interfaces and communication Smart grid capacity Reboot Grid Charging interface Dynamic load management Rescue guidelines Accident Battery system Charging stations Cell sizes Vehicle/systems Cell connections Environmental conditions EMC Capacity & consumption features Significance for market leadership: low high Source: Deutsche Normungs Roadmap

126 126 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Fuel Cell Drive Electric drive using fuel cells means zero emissions The use of fuel cells does not merely represent an alternative to the internal combustion engine they will even find their way into electromobility and advance its development. For example, the combination of a fuel cell and a hydrogen tank constitutes an energy storage system that is superior to current battery technology in performance, energy density and re-charging speed. In a fuel cell, chemical energy is transformed into electrical energy through the cold combustion of hydrogen and oxygen. The vehicle is propelled purely electrically, whether it employs a fuel cell or battery drive. Each variant is thus a zero-emission vehicle. When contrasted with the thermal conversion of hydrogen in an internal combustion engine, a fuel cell can achieve significantly higher efficiency. Advanced fuel cell vehicles produced in Germany have an output of more than 100 kilowatts and a range of nearly 400 kilometers with 4.1 kg of H2. It only takes a few minutes to fill the tank. The fuel cell thus continues to be a promising powertrain option and thus an important component of the German auto industry s diversified strategy.

127 127 Eco-Innovations Protection of the Climate Begins with a Good Idea With their inventiveness and innovations, German manufacturers and suppliers are working continually on efficient and thus environmentally friendly concepts for cars and commercial vehicles. Their goal is to offer the most CO 2 -efficient models in each vehicle class. The EU has endorsed the recognition of eco-innovations for the reduction of CO 2 emissions Despite the progress that the auto industry has achieved, EU regulations limiting CO 2 emissions pose an enormous challenge. As a technology leader, the German auto industry is working at full speed on mastering this task. For that, it is essential to fully exhaust all opportunities for CO 2 reduction ranging from engine and drivetrain optimization to the use of biofuels and other measures. It is all the more important that, with the EU s recognition of eco-innovations, the opportunity has been created to take into account all measures for CO 2 reduction. With the recognition of eco-innovations, the innovative capacity of the German auto manufacturers can be further promoted. Eco-innovations are technologies that help to reduce CO 2, but cannot be captured under current test conditions for fuel consumption and thus for CO 2 (New European Driving Cycle NEDC). Some current examples of the technologies are solar roofs on cars and commercial vehicles, engine-heat storage and the production of electrical energy from exhaust heat through the use of a thermo-electric generator (see figure). Among manufacturers and suppliers, the recognition of such technologies leads to stimulative competition in innovation that ultimately is expected to benefit the environment as well as the consumer. Eco-innovations reduce CO 2 emissions, but are difficult to measure under test conditions After the sustained resistance of the EU Commission, success has been achieved in convincing Brussels to accept eco-innovations in CO 2 regulation. In this way, innovative technologies that promote a reduction in consumption are now taken into account in the CO 2 value of a vehicle. But the EU Commission s implementation of this regulation must not inhibit the development of these environmentally friendly technologies through complexity and bureaucratic obstacles. The auto industry s power to innovate ecologically must instead be strengthened. To this end, the VDA has submitted a proposal for a recognition procedure describing a simple test and approval process. It integrates national and European institutions in a practical way and simultaneously assures the necessary independence of the testing and recognition of such technologies.

128 128 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Success in CO 2 reduction provides a double service for the car driver it contributes to climate protection and saves on taxes as well. It is hard to understand why the deductibility for eco-innovations is limited to just 7 grams of CO 2 /km in the vehicle fleet. The goal should certainly be to promote the innovative power of the auto industry without applying its brakes. This is all the more true since eco-innovations have a considerable potential to reduce CO 2. To promote the comprehensive use of energy-saving technologies, it is moreover indispensable that the contribution of the individual technologies make their way into the official assessment of the CO 2 value. For one thing, these technologies diminish CO 2 emissions, and for another, they lead to a genuine bonus for the customer in the CO 2 -based regulatory systems, above all with regard to the CO 2 -based vehicle tax. In the end, eco-innovations do not just reduce carbon dioxide emissions. They create markets for environmental technology, strengthen the competitiveness of manufacturers and the supplier industry and secure jobs in Germany and Europe as a result. In addition, the technological leadership of the local auto industry can be exploited to secure its competitive position on a sustained basis. In eco-innovations, ecology and the economy go hand in hand. Climate protection always begins with a good idea and should not depend on whether a technology is measurable in a laboratory situation or not. The concept of the thermoelectric generator as an eco-innovation Mechanical usage energy Cooling energy Short, fast heat sequence Additional mechanical energy Waste gas energy Losses due to heat transfer Losses due to real energy conversion process Concept of thermoelectric generator (TEG) Additional electrical energy Source: BMW

129 129 The New Vehicle Fuel Consumption Labeling Anyone buying a refrigerator or washing machine looks for the green bar. This is because the color label with the letter A gives the buyer the confidence that the appliance is energy efficient. What we know and assess when we buy white goods has now been carried over to cars: a comprehensible color scale that informs the customer about the CO 2 performance of a new car directly at the point of purchase. The proven scheme for white goods is carried over to cars The new energy consumption labeling for cars is due out before the end of Its goal is to create a clear information system that spells out how efficient a certain model is, that is, whether it consumes an average, high or low amount of fuel. In addition, all vehicles on the market are assigned to energy-efficiency classes according to their weight and labeled with a range of colors. The following is planned for Germany: Vehicles that feature considerably better-than-average fuel consumption and emissions values in their weight class are assigned to the green categories. If the vehicles are average, they are categorized as yellow. Vehicles that are worse than average are labeled red. Based on the color scale, the customer can immediately see whether the vehicle in the comparison group considered is economical or not. In this way, a compact car is compared to another compact car and a minivan is compared to another minivan. Critics of the planned eco-seal are inflamed by the fact that it is not orientated to absolute CO 2 values. But the result of an absolute measure covering all cars would be that small cars would fundamentally be classified as green and larger cars basically as red. The consumer would not learn how efficient a particular car was in comparison with similar models of its size. But it is precisely this comparison that makes a transparent purchase decision possible in the first place. For example, anyone shopping for a minivan is not interested in how much fuel it consumes in comparison with a compact car just as it is clear to customers that a larger refrigerator for a family with several members consumes more energy than a small refrigerator for a single-person household. The relative evaluation system spurs manufacturers to greater gains in efficiency. Whether the category is compacts or family cars, each must make the effort. This creates competition in all classes, driving research and development within the companies. The system intensifies if CO 2 values continue to improve in the future. Comparisons within vehicle weight classes promotes competition among manufacturers The planned label thus has a crucial advantage in: it promotes competition among companies to develop models that are increasingly fuel-efficient and sensitizes consumers to fuel efficiency. Both will result in a significant reduction in CO 2 emissions. The concept presented can also be a model for European harmonization. In a practical way, it complements the weight-related CO 2 regulation for cars that Brussels has approved.

130 130 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Possible visual design of the label Information regarding fuel consumption, CO 2 emissions, and current consumption in the meaning of Pkw-EnVKV (Car Energy Consumption Identification Ordinance) Brand: Model: Capacity: Fuel consumption CO 2 emissions Current consumption Fuel: Other energy carriers: Weight of vehicle: combined: inner city: outside: combined: combined: /100 km /100 km /100 km g/km kwh/100 km The values indicated were determined in accordance with specified measurement procedures (Art. 2, Nos. 5, 6, 6a PkW-EnVKV, in the version currently in force). CO 2 emissions incurred by the production and provision of the fuel or other energy carriers are not taken into account in the determination of the CO 2 emissions in accordance with Directive 1999/94/EC. The data does not relate to an individual vehicle and does not form a constituent part of the bid, but serves solely for comparison purposes between the different types of vehicles. Note with regard to Directive 1998/94/EC: The fuel consumption and CO 2 emissions of a vehicle depend not only on the efficient utilization of the fuel by the vehicle, but are also influenced by driving behavior and other non-technical factors. CO 2 is the greenhouse gas mainly responsible for global warming. A guideline to the fuel consumption and CO 2 emissions of all private car models offered for sale in Germany can be obtained free of charge at any point of sale in Germany at which new models of private cars are on display or offered for sale. CO 2 efficiency On the basis of the CO 2 emissions measured and determined by taking the weight of the vehicle into account A+ A B C D E B F G Annual tax for this vehicle Energy costs with a run performance of 20,000 km: Fuel costs ( ) at a fuel price of euro/payment unit Current costs at a current price of euro/payment unit Euro Euro Euro Prepared on: Source: VDA

131 131 Air Conditioners When it comes to air conditioners, the German auto industry is placing greater emphasis on climate protection. The Directive of the European Parliament and of the Council relating to emissions from air-conditioning systems in motor vehicles provides that motor vehicle models receiving type approval after January 1, 2011, and all new vehicles introduced on the market from January 1, 2017, must solely contain coolant that is highly environmentally friendly. The EU Directive defines highly environmentally friendly coolants as those with a Global Warming Potential (GWP) value of less than 150; this means that the effect on climate per kilogram of coolant is less than that of 150 kg of CO 2. This represents an enormous advance over the coolant R134a used in the past, which has a GWP of 1,430. It also reduces the coolant s effect on climate by around 90 percent, yet the coolant manages to cool the interior of the vehicle just as well as that previously used. Various alternatives were evaluated with a view to meeting the new, highly ambitious value. At first, only one coolant fulfilled the high requirements of German vehicle manufacturers. New insights and the results of intensive research projects, as well as other technical advances, have resulted in the alternative coolant R1234yf, which has GWP of only 4. R1234yf represents a reduction in greenhouse effect of more than 99 percent compared with coolants used today. This means the EU requirements are more than met. Auto industry places greater emphasis on climate protection The new coolant R1234yf has been thoroughly researched over the last two and a half years. Extensive tests and studies were carried out in internationally respected laboratories by a global association of companies, including more than a dozen vehicle manufacturers and over 20 suppliers; the coolant manufacturer was also able to rely on this research while developing R1234yf. As early as November 2009, the renowned Society of Automotive Engineers International (SAE International) announced in a press release that R1234yf can be safely used as a coolant for air conditioners in vehicles. When all research was completed in 2010, it was clear that in actual use, the coolant R1234yf is comparably safe compared to the previous coolant. It has received global acceptance, can be used in older systems and has a GWP that is at least as good as R744 (CO 2 ) when considered overall and it is significantly better than the coolant R134a that was previously used. These exciting advantages make R1234yf a viable choice for use around the world. After considering and examining the extensive tests, studies and analyses, the German auto industry has decided to join the other vehicle manufacturers in using R1234yf as a coolant to satisfy the new statutory requirements. This means that a global standard can be maintained even when a climate-friendly coolant is used. Standardization is particularly important, since it is the only way to ensure consistent global introduction of a new coolant with a low GWP. An isolated national solution would not be meaningful and would subject the German auto industry to considerable competitive disadvantages compared to its competitors on account of unprofitable scale effects resulting from lower production quantities. If German vehicle manufacturers had decided to go it alone with another coolant, this would have meant additional risks with regard to product liability in the important export markets. Moreover, using several different coolant systems in consumer vehicles would have made manufacturing processes considerably more complex, increased the risk of error and been associated with higher risks. German vehicle manufacturers have also had the approach and validity of the risk analysis results, which were generated by the global cooperative effort, confirmed by an independent TÜV expert assessment. Handling of coolant in service stations was also assessed. Under the aegis of German statutory accident insurance, the VDA, the Verband der internationalen Kraftfahrzeughersteller (VDIK, the Association of International Motor Vehicle Manufacturers), the Akademie des deutschen Kraftfahrzeuggewerbes (Academy of German Motor Vehicle Trades), TÜV Rhineland and the Zentralverband des Kraftfahrzeuggewerbes (ZDK, the Central Association for Motor Vehicle Trades) have published guidelines for servicing coolant in motor vehicle air-conditioning systems. The service stations must comply with the relevant regulations as previously. There are no significant changes. For these reasons too, servicing R1234yf air-conditioning systems should be regarded as unobjectionable.

132 132 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Environmental Protection Related to Production The new EU Industrial Emissions Directive should not lead to more restrictive national regulations The new EU Industrial Emissions Directive 2010/75/EC (IED) was published in December This constitution for plant approval has been produced by revising the previous EU Integrated Pollution Prevention and Control Directive (IPPC) and includes six sub-directives for specific sectors. Significant amendments include requirements for soil conservation, large-scale furnaces, and for inspections at companies, as well as reviewing and updating approvals on a regular basis. The Directive must now be implemented in national law within two years. From the perspective of the German auto industry, it is important that the regulations do not become more restrictive. Additionally, the applicable German law must be taken into account as a baseline. The Directive s requirements include describing the current state of production processes with special relevance for the environment. These are applied as the standard for all plants in the EU. This will result in codification of the current state of technology across Europe into the so-called best available technique (BVT) sheets. The German auto industry welcomes this development since the previous EU legislation lead in part to member states having environmental standards that differ considerably from one another. The new Directive should now lead to better harmonization and also prevent environmental dumping. It remains to be seen how effective this leveling process will be, since there remains room for interpretation at the level of implementation into national law. Total water acquisition by vehicle manufacturers in m 3 80,000,000 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000, Drinking water Industrial water Total Source: VDA

133 133 The revised Directive on the greenhouse gas emissions trading scheme 2009/29/EC (EU-ETS Directive) is currently being implemented in German law through the amendment of the German Act on the Greenhouse Gas Trading Scheme (Treibhausemissionshandelsgesetz, TEHG). When the Directive entered into effect, it became clear that several significant changes would apply to the third trading period from 2013: while, up to now, some trading certificates have been issued without cost, in the future they will be auctioned off; however, industrial plants can provisionally still receive costfree allowances scaled to ambitious product benchmarks. The number of certificates within the EU will be limited. In addition to large-scale combustion plants, the emissions trading scheme will apply to other industrial sectors. Furthermore, some smaller plants will also be included in the trading scheme. Some plants in the auto industry may also be included in the emissions trading scheme. The Directive on the emissions trading scheme also applies to the auto industry For the German auto industry, it is important that the legislative authority exercises moderation in implementing it into German law. By formulating a suitable definition of plant, disproportionate administrative expenses can be avoided for insignificant emission quantities. But even then, the third trading period will lead to significant costs to European industry and to consumers. Initial studies predict that the emissions trading scheme will result in cost rises of up to 200 euros per vehicle due to direct and indirect effects. For years, the German auto industry has been the forerunner in environmental protection related to production. Since the early 1990s, modern techniques have lead to a reduction in the amount of drinking water used by more than half. The amount of process water used was also reduced considerably. This is mirrored by similarly reduced quantities of wastewater. The next development step has already been reached: a VDA member-company succeeding in building the ideal wastewater-free factory on one site. Environmental protection related to production continues to advance examples are water conservation and high recycling rate Total wastewater from vehicle manufacturers in m³ 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000, Wastewater Cooling water Total Source: VDA

134 134 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Since 1990, motor-vehicle production in Germany has increased dramatically, while the vehicles themselves have also continued to increase in complexity. Nevertheless, the overall waste generated by auto manufacturers has remained virtually unchanged. This testifies to highly efficient manufacturing processes. In particular, the recycling rate has increased enormously over recent years. This is unsurpassed. While two decades ago, three quarters of waste was disposed of, today more than three quarters are recycled. This number does not even include very valuable waste metal, of which 100 percent is recycled. If they were included, the recycling rate would almost reach 100 percent. But today, it is already clear that the amount of waste generated by vehicle manufacturers in producing a vehicle in Germany that ends up in the garbage would fit in a household bucket. For paint coatings and in energy consumption, German companies are at the top The German auto industry leads the world in maintaining air quality. Thanks to procedures introduced for the first time in Germany, today each square meter of painted vehicle surface emits hardly any solvent. Studies show that the German painting facilities are the leaders in Germany, and in the world. Energy consumption in the industry has fallen steadily over the last two decades. Energy management systems, energy generation from exhaust, using solar systems, heat exchangers, optimized air circulation and heating, as well as heat damming, have all contributed to continuing reduction in energy consumption per vehicle produced. Finally, the crisis of 2009 temporarily interrupted the trend, since even though factories were operating well below capacity, their consumption remained fixed at a high rate. Now a point has been reached at which further cost-reduction measures can only be implemented at disproportionately high cost. This is why new processes are being tested for ultra-low-energy painting. More requirements and state provisions would endanger Germany s competitiveness. In all cases, costs should be avoided if they cannot be included in any amortization cycle. Solvent emissions by vehicle manufacturers in tons 25,000 20,000 15,000 10,000 5, Source: VDA

135 135 Total waste output from automobile manufacturers (cars and trucks) in tons 500, , , , , Total of which, recycling Source: VDA Total energy consumption by German automobile manufacturers by types of energy and years in GJ (cars and trucks) Source: VDA

136 136 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Materials in Auto Manufacturing Standardization and harmonization of materials and test methods Globalization increasingly requires the auto industry to take measures to describe and standardize materials and testing procedures; these are then codified in the form of industry standards or national and international standards, which constitute the state of technology. This is a necessary first step on the road to quality assurance and efficient development and production processes. The intensive collaboration on standardization processes that culminate in ISO standards is a fundamental task of auto enterprises and their suppliers. The VDA Materials Council is a steering committee that coordinates the activities of working groups, which are specific to professional areas and types of materials. It is involved in pre-competitive standardization and harmonization of materials specifications and test methods. To this end, vehicle manufacturers, suppliers of systems and components, and materials manufacturers work together to develop technical directives and recommendations; the goal is to reduce time and costs involved in testing and approval processes along the supply chain and to satisfy quality requirements. The Materials Council also coordinates cooperative efforts on national and international standardization proposals, as well as coordinating technical legislation and regulations. Another aspect is adapting international standards for use in the German auto industry, and conversely, introducing industry standards at the level of international standards. Some examples of projects: In the Working Group for Materials Laboratory Evaluation, VDA Recommendation 250 was expanded as a unitary standard for evaluating materials laboratories in the auto industry. This catalog of requirements forms a unitary evaluation system that can be used across the board to evaluate the quality of laboratory services in the auto industry. This avoids multiple audits and reduces the cost of expensive laboratory approval procedures.

137 137 In the Metals Working Group, the Global Standards Project Group developed a materials sheet with the objective of reducing the complexity and diversity of national, regional and factory standards related to requirements for cold and hot-rolled steel sheets / panels for body components. This process will also define harmonized testing procedures for use around the world, as well as requirements for coatings and surface quality. Under the leadership of the VDA, and with the collaboration of the German and international steel industry, the current Materials Data Sheet VDA 239 is being adapted toward publication as an industry standard, after which it will appear as an international ISO standard. Another project group in the Metals Working Group has completed its work on the subject of plate flexing tests for metallic materials. VDA Recommendation describes a standardized testing method that allows for conclusions about deformation behavior and susceptibility to failure of metallic materials during reshaping processes. The Interior Emissions Working Group successfully collaborated in developing ISO The current industry standards were integrated into international standards. The corresponding ISO standard should be available sometime in In 2011, the working groups are continuing to work actively on ongoing projects and activities. In particular, the Working Group for Textiles, Leather and Plastic Web Products and the Polymers Working Group are expected to complete and publish various VDA recommendations. Dr. Stephan Eisenberg, Director of the Wolfsburg Site Laboratory, Volkswagen AG (Chairman of the Production Materials Committee) Materials and surfaces are the key to the quality and long-term durability of our vehicles. We work together to lay out testing methodologies for materials testing and lay the foundations necessary to achieve the highest quality ambitions. Material rejects AK elastomers AK content materials AK interior emissions AK metals AK surface technology AK polymers AK textile, leather, plastic web materials AK non-destructive testing AK material laboratory evaluation Source: VDA

138 138 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Modern joining technology for lightweight construction of motor vehicles For lightweight construction, calculations can replace expensive tests Motor vehicles are composed of a range of components that are joined together. Joining technology is a very important aspect of motor vehicle construction. Joining must ensure compliance with the quality requirements and functional characteristics of the vehicles and also satisfy economic requirements. In the research cluster Materials and Production Technologies and Calculation Methods within the Association for Research in Automotive Technology (Forschungsvereinigung Automobiltechnik, FAT), the Joining Technology Working Group is doing justice to the importance of joining technology. For many years, this working group has contributed to research and development in the area of joining techniques in motor vehicle construction. The future of lightweight construction of motor vehicles: high-strength steel varieties and carbon fiber body The body accounts for about 40 percent of vehicle weight. Lightweight construction works toward the goal of markedly reducing how much vehicles consume and how much CO 2 they emit. The Association for Research in Automotive Technology (FAT) collaborates with the auto industry and technical universities to develop innovations in lightweight construction. The goal is to reduce the total weight of the vehicle by half compared to what it weighs today. High strength steel is increasingly being used. New materials, such as carbon fiber reinforced plastic (CFRP), are currently still expensive so they are mainly used in the premium segment. Over the long term, only those lightweight construction concepts that are viable in terms of cost, quantity and weight for large-scale serial production of small consumer vehicles will be successful. Increasingly, developers are placing special emphasis on CFRP since this material has five times the strength of steel and is a third lighter than aluminum. It is often said the main disadvantage of CRFP is that it tends to break on hard impact, rather than deforming like steel or aluminum. New materials and calculation models are necessary to calculate the fracture properties of CRFP a current task for the researchers working for FAT. The effort to reduce the expense of time-consuming tests is increasingly important in the process of developing new, efficient lightweight construction concepts. Experiments can be dispensed with thanks to the high accuracy of prior calculations. The ability to estimate the durability of joints is extremely important. Designers will be supplied with objectively comparable data to help them make decisions on employing certain joining technologies. Joining does not just create a local connection between two components (at the joints) but also changes the form of the new part created in this manner. The joint can be in fixed or mobile form. Any forces exerted during operation will be borne by the load-bearing areas of the joints.

139 139 The research objective is to characterize and qualify joints. Currently, areas of emphasis include development of calculation concepts for use in reliable design and modeling of joints. Necessary steps on the road to developing safe and light vehicles include the execution and calculation of hybrid joints, standardization of data formats for finite element programs and harmonization of experiments. The typical joining techniques in automotive construction are line and spot welding, punch riveting, clinching, soldering, screwing and adhesion. Joining techniques that excel economically include resistance spot welding, laser seam welding and semi-tubular punch riveting. In terms of materials, steel and aluminum joints are being researched alongside hybrid material joints and, in the future, fiber composite joints. Significant results have been achieved especially in the area of qualifying calculation concepts used to calculate the lifespan of line and spot-welded structures. The many insights gained through a range of research proposals have made their way into commercial software used to calculate lifespan and are being implemented as standards in automotive manufacturers development processes. The research culminates in close collaboration with appropriate faculties and endowed chairs at German technical universities. Joint research topics at FAT are also coordinated with other research associations working in the area of joining technology. These include Deutsche Verband für Schweisstechnik und verwandte Verfahren (DVS), i.e., the German Association for Welding Technology and Related Processes, Europäische Forschungsvereinigung für Blechverarbeitung (EFB), i.e., the European Research Association for Metal Sheet Processing and the Gesamtausschuss Klebtechnik (GAK), i.e., the General Council on Adhesion Technology. There is also close collaboration with software manufacturers when it comes to implementing the new results.

140 140 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Joint Research Under the Aegis of the Association for Research in Automotive Technology In the Association for Research in Automotive Technology (FAT), all German consumer and industrial motor vehicle manufacturers are joined by many suppliers under the aegis of the VDA to conduct joint research in the pre-competitive phase. Through their projects, FAT members support the ever-increasing high-tech ambitions of the German automotive industry and their efforts to achieve new and better solutions on the road to the environmentally friendly, safe and comfortable mobility of tomorrow. Prof. Dr. Herbert Kohler, Director e-drive + Future Mobility, Group Representative for the Environment, Daimler AG (Chairman of the Automotive Engineering Research Association ) The Automotive Engineering Research Association is a forum in which competing companies and firms along the automotive value chain cooperate with research institutions to lay the foundations for new products together and at the pre-competitive stage. The research projects focus on the vehicle as a whole. They also look into technical interactions between the vehicle and street traffic and rail tracks. Through the research activities of FAT, the VDA assumes responsibility for the overall traffic situation of the future. FAT s research goals develop dynamically in response to the changing requirements of markets and enterprises. Its work concentrates on five research areas: Safety FAT devotes intensive efforts to research on integral safety. Driver information systems, accident data collection and improved driving dynamics increase the level of safety. Energy efficiency and electrical integration Energy storage and energy management are basic pillars of modern electromobility. The energy efficiency of the overall vehicle reduces CO 2 emissions. New hardware and software solutions create functional networks that help to make the mobility of the future even safer and more comfortable. Software maintenance and reliability processes are developed jointly. Materials / production technologies and calculation methods Vehicle weight is reduced thanks to lightweight construction and modern jointing techniques, which also contribute to reduced fuel consumption. Viable product designs and simulation software shorten the time it takes to develop motor vehicles. Technical environmental research The emphasis is on resource conservation and sustainability. For example, this includes precise measurements to assess vehicle emissions. Industrial vehicles as a transport system FAT develops forward-looking street traffic scenarios through its research into the efficiency of carriers and motor vehicles. The research conducted by the German industrial vehicle industry (train engines, superstructures and trailers) is focused on this area.

141 141 Implementation of new ideas and inventions has long since become a company process under professional guidance. Yet the fundamental challenges to R&D, such as environmental protection, climate protection and safety, cannot be comprehensively mastered alone for both environmental and economic reasons. For this reason, companies in the German auto industry also rely on the Association for Research in Automotive Technology to complement their own global R&D networks. Here, companies in the German auto industry collaborate with research institutions to jointly establish the foundations for new products. FAT continues to work with more than fifty German technical universities specializing in automotive engineering. Its projects support the research activities of scientific institutions. Developers from companies and scientists working in research collaborate closely and exchange valuable insights as part of research projects an invaluable advantage that strengthens Germany s capability in technology and innovation. Councils within the auto industry, allied associations and state agencies all work closely together to develop objectives for FAT proposals and to share the results. FAT has established long-term collaborations with certain partners, which form the basis for joint definition and financing of research proposals. The results are published after a proposal has been concluded. Since establishment, FAT has published more than 200 volumes. Information is provided about current projects at meetings, conferences and in specialist publications. The way that cooperative efforts such as FAT bring together practical expertise and experience makes Germany a unique place for the automotive industry. The R&D community is a signal to those in politics that the industry is meeting the current challenges collaboratively. Joint research under the overall cover of FAT A B C D E Competing companies and firms in the value creation chain act in cooperation Joint definition of research projects Pre-competitive character Involvement of colleges/institutes Joint financing, supported by public funding Research results Preparation and provision of results for members and for the public Source: VDA

142 142 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Applied environmental protection in product planning The VDA and its member enterprises collaborate on numerous projects to make environmental advances The environmental efficiency potential of products and technologies is increasingly being evaluated holistically, i.e., over their entire life cycle. In this connection, the auto industry decided years ago to embrace an environmental balance in accordance with ISO It is often necessary to include the supplier chain in such life cycle analyses. For this purpose, the VDA has published a data collection template to evaluate the environmental balance in the supplier chain. That is not the end of the story: specifically, the VDA has supported standardization efforts toward the carbon footprint (ISO 14067), the water footprint (ISO 14046), the International Reference Life Cycle Data System (ILCD), and the WBCSD/WRI Greenhouse Gas Protocol, as well as promoting the environmentally friendly vehicle project. The EU End-of-Life Vehicle (ELV) Directive The two-year reassessment of heavymetal prohibitions in cars is no longer appropriate Different recycling quotas are bureaucratic and complicated The ELV Directive of the EU prohibits the use of lead, chromium VI, cadmium and mercury in new vehicles. There are some technically justified exceptions to this prohibition, but most are provisional and are being reviewed by the commission on a regular basis. A new revised list was published this year. Since promulgation of the EU Directive, the heavy-metal content of vehicles has fallen dramatically. For this reason, it no longer makes sense for the time-intensive review process to occur every two years. In view of both the reduction that has already been achieved and foreseeable technical development, it would be appropriate to extend the period to at least five years. The question of quotas is also very important. There are currently two sub-quotas, one for reuse and (material) recycling of an end-of life vehicle, which for 2015 is at least 85 percent of a vehicle; and another sub-quota, which calls for an additional 10 percent recycling, in which use of energy procedures is authorized. From the perspective of the automotive industry, it is urgently necessary to end this sub-quota system and to introduce a general quota for reuse and recycling equal to 95 percent in This is also desirable from a scientific perspective, since an overall environmental balance shows equivalence between the material and energy recycling processes. A special quota for materials recycling is not necessary, because in Germany there is a de facto prohibition on ordinary disposal of materials, including shredder residue. Hazardous materials and chemical law Joint industry implementation strategy provides relief Now, five years after publication of the REACH Directive of the European Parliament and of the Council on the Registration, Evaluation, Authorization and Restriction of Chemicals, the REACH Directive remains immensely relevant to the auto industry. In December 2010, another important milestone was reached. Until then, materials imported into the EU market in quantities over 1,000 metric tons and substances of very high concern (SVHC) had to be registered with the European Chemicals Agency. The VDA has now reached consensus with the most important automotive and supplier associations to develop its own implementation strategy with the necessary support. In addition to general support measures, a guideline for implementing REACH in the automotive industry was published (Automotive Industry Guidelines AIG), which is currently being revised. The VDA has also produced a handout that governs forwarding of information on the SVHC materials.

143 143 The globally harmonized system for classification of chemicals The introduction of additional regulatory frameworks, such as the new classification and labeling law for chemicals, presents new challenges to the auto industry. The Regulation of the European Parliament and of the Council of December 16, 2008 on classification, labeling and packaging of substances and mixtures (CLP Regulation) reached its first significant milestone on December 1, Since then, all chemical substances must be classified and labeled in accordance with the new regulation. Transition periods still apply to mixtures (preparations), however they expire on June 1, The Globally Harmonized System of Classification and Labeling of Chemicals (GHS), which was developed at UN level, is being implemented throughout the EU by way of the above CLP Regulation. It can be expected that considerable communication measures will be necessary in the automotive industry until mid Systems relevant to classification and labeling will have to be identified and adapted. This will generate considerable expense without improving staff protection. New law results in higher administrative expenses

144 144 E n v i r o n m e nt, c li m ate p r otecti o n a n d tec h n o lo gy Changes in German chemicals law Light and shadow with the new German Hazardous Substances Regulation (Gefahrstoffverordnung, GefStoffV) As part of adapting to the European chemicals law, the German legal situation has also been affected. The new Hazardous Substances Regulation (GefStoffV) entered into force on December 1, The changes include both adaptations to the REACH and CLP Regulations, as well as recommendations for practical application. The new regulation is now considerably more oriented to practice, since it puts the emphasis on risk assessment. The risk assessment is used to determine what measures should be taken. The special regulations and the expansion of CMR substances also give enterprises more freedom of decision, yet at the same time place more responsibility on employers shoulders. The additional bureaucratic effort for directories, especially the directories of employees who handle certain hazardous substances, and the 40-year retention period for exposure data, will still cause considerable problems during implementation. Occupational protection: number of accidents continues to fall The chemical law situation has only now yielded the first effects on occupational protection. These new requirements must be integrated into existing processes. The automotive industry s objective is to continue on the same path of improving work processes and reducing accidents in the workplace. Last year, too, the number of work-related accidents and resulting days missed fell, although a large part of the potential for improvement has been thoroughly exhausted. Accident frequency index of accidents at work requiring mandatory notification, per 1 million working hours st hy Source: Industrial Safety

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147 Safety and Technology Michael Hog graduate in aerospace engineering, manager vehicle integration in vehicle development area, EDAG GmbH & Co. KGaA, Fulda

148 148 Sa f et y a n d Tec h n o lo gy Traffic Safety in Germany and Europe Accident statistics for Germany The number of traffic casualties fell dramatically The positive trend in the occurrence of accidents continues: the German Federal Statistics Office reports reductions not only in those who died in traffic accidents, but also the numbers of those who received minor or serious injuries due to traffic accidents. The reduction in accident numbers was particularly notable in The number of those who died fell by 10 percent to 3,750 compared to the previous year. Deaths on highways accounted for 475, or about 13 percent. This is all the more notable since the total distance driven had increased over the previous year to about 705 billion kilometers. Above all, it is the safety technology in our vehicles that is responsible for making traffic in Germany safer than ever before and for the continuing reduction in the number of traffic accident deaths. Over the last ten years, Germany has managed to virtually halve the number of traffic victims (-46.3 percent). This was the declared goal of the EU when it announced its 3rd European Action Program ( ) for traffic safety in Other European countries were not quite as successful, with the EU as a whole exhibiting a reduction of 36 percent. Germany compares favorably when compared internationally to European countries that have a general speed limit in effect: statistically, highways in Germany are responsible for 2.2 accident deaths per 1 billion kilometers driven fewer than in countries like Austria (2.9) and Belgium (3.9). Number of fatal accidents in relation to types of transport in units 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Cars and utility vehicles Bicycles Motorcycles/scooters/mopeds Pedestrians Source: OSD

149 149 Guidelines for a European traffic safety policy Over the present decade, the EU Commission wants to renew its efforts to reduce the number of traffic accident deaths across Europe by half. This is the declared objective of the guidelines for traffic safety, which the Commission introduced in the summer of These guidelines recommend various instruments to improve traffic safety. Consistent with the idea of an integrated approach, they all focus on those responsible for traffic safety: road users, the state and motor vehicle manufacturers. The EU wants to place responsibility on road users, states and the automotive industry For example, improved traffic education and driver training are recommended for road users; EU grants to support infrastructure projects are to be indexed to their quality in respect of safety. Primarily, though, the commission continues to rely on improvements in vehicle safety technology. German 2011 traffic safety program Based on the current European guidelines for traffic safety, Germany has taken the initiative and introduced a national traffic safety program in The favorable trend can only serve as inspiration to continue the long series of improvements. This is why the German automotive industry is supporting the goals defined by the German Federal Ministry for Traffic, Building and Urban Development (Bundesministerium für Verkehr, Bau und Stadtentwicklung) to reduce the number of road users fatally injured by a further 40 percent by 2020; the industry is prepared to contribute its share toward reaching this ambitious goal. The VDA expressly welcomes the structuring of the 2011 traffic safety program into the three areas of drivers, vehicles and roadways this completes the complex control circuit, as it were. Development of the rate of traffic accident fatalities on motorways in Western Europe per billions of vehicle kilometers France -94 % Great Britain -91 % Belgium -90 % Austria -81 % Switzerland -80 % USA -83 % Germany -90 % Source: IRTAD

150 150 Sa f et y a n d Tec h n o lo gy Topical area: driver individual Traffic monitoring must increase acceptance of regulations The education, and continued education, of all roadway users is a fundamental factor contributing to safety. Increasingly diverse vehicle functions and complex traffic situations require that use of roadways be combined with continuing education for all age groups. Beginning training early, and providing information on traffic regulations and how to use new vehicle technologies must be promoted; as should an understanding of cooperation in traffic situations and acceptance of traffic rules. We need to ensure that traffic monitoring increases this acceptance and does not increase risks. Only when road users reflect on the causes and effects of their actions in traffic situations can they begin to change their behavior. Topical area: infrastructure roadway Roadways must be in good condition as a prerequisite for traffic safety. Good infrastructure is an important pillar of traffic safety. On the other hand, insufficiently maintained roadways can compromise traffic safety and negatively impact the functionality of modern driver assistance systems. Poor or insufficient street signage can also reduce the reliability of systems that are in place to help drivers identify the different lanes. Hidden intersections or lanes, line-of-sight impediments due to unnecessary structures along the street, and confusing street signage are some areas that should be addressed. All those involved should share the common goal of constructively supporting implementation of the IVS Directive (intelligent vehicle systems) and the action plan at the European level; they should also ensure that tried-and-tested procedures, standards and technologies from Germany are integrated into appropriate European standards. The automotive industry supports the introduction of automatic emergency notification systems in passenger vehicles (ecall) and would welcome steps toward promoting acceptance of automatic emergency notification among leading first responder bodies. We must also ensure, however, that ecall is implemented across Europe and that the infrastructure necessary to create a universal rescue chain is made available. Topical area: vehicle technology Safety regulations should also apply to electromobility The German automotive industry emphatically supports increased market penetration of driver assistance systems. The Vienna Convention on Road Traffic of 1968 defines a solid legal framework for modern assistance systems, which continues to place responsibility for driving the vehicle on the driver. It is desirable that integral vehicle safety is incorporated increasingly into assessments of assistance systems and that statutory regulations remain neutral to technology. The goals set forth in the German National Electromobility Platform (Nationale Plattform Elektromobilität, NPE) regarding increased approval of electrical vehicles on German roadways also requires the development of appropriate safety regulations. The automotive industry is actively engaged in this area and is fulfilling its responsibility to apply the existing high level of vehicle safety to new kinds of vehicles.

151 151 The Joint Project Safety of Small Transport Vehicles Shows: Practically No Difference between Passenger Vehicles and Transport Vehicles Transport vehicles supply us with everything we need on a day-to-day basis, right to the front door. They are an indispensable means of directly supplying the population. They are used to transport household goods like furniture and electronics, for catering, short-trip public transport in rural areas and for emergency medical services. They serve as mobile headquarters for trades people and, above all, they are the natural accompaniment to ever-increasing Internet commerce, which delivers ordered products by express courier. The transport vehicle is the ideal mode of transportation for short-trip supply of the population with goods required on a daily and long-term basis An increasing number of goods must be transported on time and in small quantities, and a wide range of services impose new requirements on compact vehicles. The industrial vehicle industry offers customers a broad range of transport vehicle products. Transport vehicles are especially suited for small-volume delivery jobs in urban areas, and will continue to profit from the trend toward smaller cargo sizes. Transport vehicles hardly place any restrictions on flexibility, variability and adaptability. They are available as station wagons, flatbed trucks, box trucks, refrigerated vehicles and dump trucks.

152 152 Sa f et y a n d Tec h n o lo gy Even taking their increased use into account, transport vehicles are involved in increasingly fewer accidents Transport vehicles now navigate traffic just as safely as passenger vehicles and provide their occupants with protection comparable to that of a passenger vehicle. Involvement in accidents has been falling for ten years. These are the preliminary results reached by the study Safety of Small Transport Vehicles (Sicherheit von Kleintransportern) currently being jointly conducted by the VDA, the Bundesanstalt für Straßenwesen, BASt (the German Federal Roadways Research Institution), the Unfallforschung der Versicherer, UDV (the Accident Research Body of the Insurers) and DEKRA. The results show a trend reversal beginning in 2001 in the number of accidents in which transport vehicles were involved. The number of transport vehicles that were involved in accidents fell from 15.9 per 1,000 registered vehicles to only 11.8 in The comparative value for passenger vehicles was 9.4 in 2008, however the above-average driving time of transport vehicles is not included. Considering that transport vehicles cover 50 percent longer distances than passenger vehicles annually, it is clear that transport and passenger vehicles behave almost the same. This development is notable, mainly because in 2009 four-times more transport vehicles were registered in Germany than in 1997: their numbers rose from 164,000 to 672,000 vehicles. The assistance and safety systems with which modern vehicles are equipped played an important role in this increase. Modern safety equipment is available in all transport vehicle models Because of their ubiquity in supplying the population, it is especially important for transport vehicles to meet the highest safety standards. For this reason, vehicles in the weight segment between 2.8 and 3.5 metric tons have for years been equipped with power steering, anti-lock braking systems (ABS), anti-slip regulation (ASR), electronic stability programs (ESP), assisted braking, driver-side airbag, 3-point automatic seat belts, seat belt tighteners and equipment for securing cargo. In particular, equipment for securing cargo has been greatly improved, such as separators in the cargo area, lashing eyelets in the cargo area floor, lashing rails on the side walls, and anti-slip coverings for cargo area floors. Accident involvement of vans since 2001, in decline (vans from 2.8 to 3.5 tons) Involvement per 1,000 vehicles , Source: VDA

153 153 The revised DIN Standard on securing cargo in transport vehicles, which was published in 2004, represents a further step in this direction. Moreover, tires and brakes complying with the current passenger vehicle standard are being improved on an ongoing basis. Many manufacturers also offer training courses on driving safety. The effect of these measures can be seen in the marked reduction since 2001 in the number of accidents in which small transport vehicles were involved (per 1,000 vehicles). The study also shows that speed limits for transport vehicles on highways can only remedy a very small proportion of accident risks. The real cause of accidents is related primarily to driver behavior and servicing. Drivers of transport vehicles still do not buckle-up anywhere near often enough: only 74 to 83 percent fasten their seat belts compared to virtually 100 percent for passenger vehicles. Cargo is also not being secured adequately. Furthermore, as with passenger vehicles, younger drivers are involved in accidents with above-average frequency. To sensitize drivers to the special challenges posed by transport vehicles, more training sessions must be offered. More training for young drivers and better service can reduce the accident risk even further Failure to have vehicles properly serviced also has a negative effect. A DEKRA analysis showed that among vehicles in the study involved in an accident, 57 percent had technical defects; in almost one in four vehicles, the lack of proper maintenance was somehow relevant to the accident. This highlights just how indispensable regular maintenance is for keeping transport vehicles in an acceptable technical state.

154 154 Sa f et y a n d Tec h n o lo gy Developments in Driver Assistance Systems Safety and comfort play an equal role in assistance systems in vehicles Modern driver assistance systems are playing an ever-larger role in making motor vehicles safer, and making driving more comfortable and efficient. The areas of application have expanded steadily, so that drivers today are supported by a range of functions, including those capable of saving them in the event of an accident. Driver assistance systems can warn the driver of an impending collision and automatically apply an emergency brake; they assist the driver when overtaking another vehicle and recognize traffic symbols; they can also prevent a vehicle from drifting out of its lane and support the driver during critical steering and braking maneuvers; they stabilize the vehicle in various driving situations and make driving as a whole more comfortable. Overview of systems and benefits Driver assistance systems can be divided into safety systems and comfort systems. These systems reduce the load on the driver, while allowing the driver to retain control of the vehicle. Driver assistance systems for safety influence the driving dynamics of the vehicle and become active when the driver loses control; this is an ideal way to avoid an accident or reduce its severity. Now that the electronic stability program (ESP) has clearly proved its benefits in the accident statistics, the next generation of assistance systems is now finding its way into modern vehicles. These include autonomous cruise control (ACC) and adaptive headlight systems, as well as a warning system when the vehicle leaves its lane and a system to help you stay in your lane. For transport vehicles, it is still possible to reduce collisions by a quarter and instances of drifting off the road by half Various studies have been performed by the German Federal Highways Research Institute (Bundesanstalt für Straßenwesen, BASt) and other research bodies. These show that for heavy industrial vehicles, broad implementation of emergency braking systems in combination with systems to assist drivers to stay in their lanes could reduce the number of collisions by 24 percent, and reduce by 49 percent the number of accidents caused by vehicles leaving their lanes. Broader application of parking assistance systems could help reduce insured damage resulting from parking, which accounts for 30 percent of all cases of vehicle damage. The number of deaths in night-time traffic accidents could be reduced by up to 6 percent if all vehicles were fitted with a night-vision assistance system. Since passenger vehicles behave differently than industrial vehicles in accidents and while driving, it is important to take the overall situation into account. This means that the systems have to be designed differently. Vehicle manufacturers and suppliers work in close cooperation to promote introduction and further development of the systems.

155 155 Overview of current driver assistance systems Driver assistance systems for safety Adaptive Cruise Control (ACC) ACC with emergency braking system (ACC plus) Active cornering headlight system Active steering Anti-lock braking system (ABS) and other systems preventing lock-up Anti-slip regulation (ASR) and electronic differential locking (EDL) Automatic windscreen wiper with rain sensor Automatic dynamic light assist system A driver assistance system that monitors the distance preset by the driver to vehicles ahead and intervenes if necessary by way of braking or controlling the engine. If a collision cannot be avoided, an emergency brake is automatically applied. The headlights also turn during cornering to significantly improve illumination of the turn. This means obstructions can be detected earlier. The steering angle is adapted to the driving situation. The faster the driving velocity, the smaller the steering angle achieved with the same action on the steering wheel. This increases comfort during parking and safety at high velocity. Prevents wheels from locking up during braking, ensuring that the vehicle can be steered through critical maneuvers. Prevents the drive wheels from spinning during start or high acceleration, thereby preventing vehicle spin. Sensors in the windscreen react to rain and cause the windscreen wipers to start. The wiper rate depends on the amount of rain falling. Active headlights illuminate a broader field and better light up the edge of the road. The automatic light expansion regulator prevents blinding of oncoming traffic while at the same time providing optimal illumination for the specific driving situation. Ascent assistance Brake assist system Automatic parking pilot Electronic stability program (ESP) Driver condition recognition (tiredness warning) Pedestrian recognition with automatic emergency braking Intelligent driver information system (situation-specific information) Night-vision system Pre-crash restraint system Tire pressure monitoring system Automated support when ascending inclines to prevent rolling back. It is not necessary to activate the hand or foot brake. Provides maximum braking power enhancement in emergency situations, minimizing braking distance. ABS prevents the wheels from locking up. Passive parking systems recognize obstacles in front of and behind a vehicle, and signal the driver with an auditory and/or optical warning if minimum distances are not observed. Active systems directly influence the steering. Targeted braking of individual wheels serves to stabilize the vehicle in critical situations. Tired drivers often make steering mistakes that they correct with exaggerated movements. When the assistance system notices such changes in steering behavior, the driver receives an acoustical and optical warning and is encouraged to take a break. The system can recognize pedestrians and automatically prevents collisions at velocities of up to 35 km/h. In the case of faster speeds, the velocity of the vehicle is reduced as much as possible before the collision. The system monitors the load on the driver and blocks less important information and incoming phone calls, which require all of the driver s attention. Night-vision systems activate in low light and darkness to make objects in front of the vehicle visible earlier, i.e., pedestrians wearing dark clothing. This system is activated to protect the driver and passengers from a collision (by tightening their seat belts, raising the seat back). Monitoring of tire pressure; visual and acoustic warning if pressure drops. Lane departure warning Lane keeping support Lane change assistance (also known as blind-spot assistance) Warns the driver if the vehicle unintentionally leaves the lane due to lack of attention or tiredness. The warning is signaled through vibrations in the driver seat or auditory signals, for example. Identical to lane departure warning, but also activates the brakes and automatic steering to return to the lane. Warns drivers about a potential collision with vehicles coming from behind when beginning to overtake another vehicle ( blind-spot ). The system is activated along with the turning signal and displays warning signals in the side mirror or somewhere near the A pillar.

156 156 Sa f et y a n d Tec h n o lo gy Driver assistance systems for comfort Navigation system Keyless lock and engine ignition Stop & go assistance. Assistance system for following the vehicle ahead in a traffic jam Target speed Support for spoken commands (language command system) Recognition of traffic symbols Helps with route planning and comfortable navigation, with additional functions like traffic jam avoidance, shortest route, most environmentally friendly route and tourist information. Unlocks the vehicle without active use of a key, ignition by pressing a button. Radar-based system that automatically adapts to the speed of the vehicle ahead, provided it is between 0 and 30 km/h. For safety reasons, the driver must take control after the traffic jam has ended. Allows the driver to set a target speed. The vehicle infotainment system can be controlled via spoken commands. A camera and the navigation system recognize traffic signs and display them for the driver on the dashboard. It is possible to implement automatic speed control.

157 157 Steps in development The German automotive industry is working actively toward improving existing assistance systems and developing new systems. One particular trend is that the systems are beginning to be networked with the vehicle environment via information exchange. Systems and activities accorded increasing importance in improving traffic safety can be subsumed under the term intelligent transport systems. Improvement of current systems and development of new ones serves to augment traffic safety Systems that previously operated autonomously will be able to expand their functionality by allowing vehicles to communicate with one another and with the infrastructure. This includes cornering speed warning systems and traffic information, monitoring and warning systems that identify obstacles that cannot be seen around a corner by using sensors placed along the roadway; the information can then be provided to other vehicles via information placards placed along the roadway. Intersection assistance systems are intended to support the driver when approaching intersections by way of steering and braking interventions designed to prevent violation of right-of-way rules and avoid accidents involving turning vehicles. It will be possible for the driver to be informed of the status of traffic lights ahead, allowing the driver to drive in an energy-efficient way. Current regulatory activities and harmonization In addition to voluntary introduction of various systems, the international automotive industry must comply with various laws and regulations. Negotiations are currently underway regarding mandatory introduction of lane departure warnings and automatic emergency braking systems for industrial vehicles and buses; these changes are being discussed in working groups of UNECE (United Nations Economic Commission for Europe) as part of the ECE regulations. Mandatory integration of driver assistance systems is being considered for industrial vehicles and buses The objective of the European initiative is to equip both lightweight and heavy industrial vehicles (categories N2 and N3), as well as passenger transport vehicles (categories M2 and M3), with these systems. As yet, the wide variety of different vehicle concepts, applications and design differences has delayed structuring of final technical regulations and defining of minimum requirements. Usually, when systems reach the degree of development seen in today s driver assistance systems, compulsory regulations are introduced. The systems are made with a high tolerance for error, ensuring that users are not overwhelmed and, at the same time, allowing them to learn to use the system. Furthermore, regulations on the introduction of new safety systems in Europe should not distort global competition. In light of this, VDA welcomes the drafting and promulgation of future regulations within a global approval process guided through the working groups of UNECE.

158 158 Sa f et y a n d Tec h n o lo gy Standardization activities in the area of driver assistance systems At the international level, the foundations of new standards for various driver assistance systems are being drawn up in the technical committee Intelligent Transport Systems at the International Organization for Standardization (ISO / TC204). The goal of standardization is to achieve a legal framework governing the functionality, use and design of driver assistance systems, at least from a national perspective. The following table gives an overview of all standards that have already been published or which apply, originating from the working group Driver Assistance Systems (ISO / TC204 / WG14). Germany is highly involved in work on ISO Standards 11270, 15622, 16787, and List of current standards for various driver assistance systems ISO Standard Standard/Project title Status Curve Speed Warning Systems Project is in the application phase. No national German interest at the moment Lane Keeping Assist Systems Project is currently being worked on by ISO Transport Information and Control Systems Adaptive Cruise Control Systems Performance Requirements and Test Procedures (ACC) Transport Information and Control Systems Forward Vehicle Collision Warning Systems Performance Requirements and Test Procedures Published in 2002; revised version published in Published in 2002, currently being revised. TS Transport Information and Control Systems Traffic Impediment Warning Systems (TIWS) System Requirements Published in Intelligent Transport Systems Assisted Parking System Parking with Reference to Other Parked Vehicles Performance and Test Procedures Intelligent Transport Systems Lane Departure Warning Systems Performance Requirements and Test Procedures Transport Information and Control Systems Maneuvring Aids for Low Speed Operation (MALSO) Performance Requirements and Test Procedures Intelligent Transport Systems Lane Change Decision Aid Systems (LCDAS) Performance Requirements and Test Procedures Intelligent Transport Systems Low Speed Following (LSF) Systems Performance Requirements and Test Procedures Intelligent transport systems Full Speed Range Adaptive Cruise Control (FSRA) Systems Performance Requirements and Test Procedures Intelligent Transport System Forward Vehicle Collision Mitigation Systems Operation, Performance and Verification Requirements Intelligent transport systems Devices to Aid Reverse Maneuvres Extended-Range Bracking Aid Systems (ERBA) Cooperative Intersection Signal Information and Violation Warning Systems (CIWS) Project application for supported vehicle parking assistance; submitted to ISO by Germany in November Published in Published in Published in Published in Expansion of ISO 15622, published in Currently patent law questions are being clarified. Currently in the development phase. Published in Project is in the development and application phase.

159 159 The 13th Technical Congress The VDA held its 13th Technical Congress on March 23 and 24, 2011 at the Forum am Schlosspark Ludwigsburg. The agenda included electromobility, continuing CO 2 reduction by increasing the efficiency of combustion engines in passenger and industrial vehicles, as well as vehicle safety. VDA President Matthias Wissmann opened this technology symposium of the automotive industry, which is the biggest in Europe and was attended by more than 400 representatives from policy and from all sectors of the automotive industry. Main topics were electromobility, efficient combustion engines and motor vehicle safety The speakers included Prof. Dr. Henning Kagermann, President of Akademie der Technikwissenschaften (acatech) and Chairman of Nationale Plattform Elektromobilität (NPE), Dr. Rudolf Krebs, Chief Representative and Director of the Electric Traction group at Volkswagen AG, Dr. Thomas Weber, board member, responsible for Group Research and Mercedes Cars Development at Daimler AG, Franciscus van Meel, Director of Electromobility Strategy at AUDI AG, Prof. Lars Hendrik Röller, PhD, President of the European School of Management and Technology, Dr. Matthias Ruete, EU Commission, Director General for Mobility and Traffic, Klaus Meder, Member of the Division Board for Automotive Electronics at Robert Bosch GmbH, Helmut Matschi, board member at Continental AG and Fritz Indra, former Executive Director of powertrain advanced engineering at GM/Opel. The conference explored the full spectrum of technical topics related to sustainable roadway transportation. The individual sessions explored the following topics: potential of combustion engines, safe electromobility, practical examples of electromobility, as well as accident safety of hybrid and electric vehicles, and systems to prevent accidents in passenger and industrial vehicles. The conference schedule also included lectures and discussions on standardization of battery cells and recharger plugs, as well as the safety of lithium-ion batteries when used for transportation and vehicle operation. The event was complemented by a specialist exhibition that showcased various types of electric and electrified vehicles, active and passive safety systems, as well as other technologies supporting environmental and climate protection for roadway transportation. Supplemental specialist exhibition on electromobility and safety systems Over the years, the conference and exhibition have become important events within the automotive industry. What began in 1999 and 2000 as part of the IAA with around 300 participants quickly developed into an independent technology event sponsored by the VDA, in Bad-Homburg in 2001 and Stuttgart in Other locations included Wolfsburg in 2003, Rüsselsheim in 2004 and Ingolstadt in These were followed by Munich in 2006, Sindelfingen in 2007 and the 10th Technical Congress held in Ludwigsburg in After 2009 in Wolfsburg, conferences were held again in 2010 and 2011 in Ludwigsburg, in the heart of Germany s automotive region. The 14th Technical Congress in 2012 will be held at the usual time (end of March) and will explore the exciting topics of the environment, energy and electromobility, as well as vehicle safety and electronics.

160 160 Sa f et y a n d Tec h n o lo gy Symbiosis of Active and Passive Safety Systems Active safety systems can help to avoid accidents In today s vehicles, the German automotive industry offers customers a wide range of driver assistance systems; in the coming years, their use will expand considerably in line with incremental networking of passive safety systems. Next to traditional systems, passive safety driver assistance systems are making an increasingly important contribution to improving traffic safety. This has meant that in recent years, improvements on classic vehicle safety have been focused increasingly on active safety systems. Primarily, assistance systems should support the driver and intervene in case of danger. These active systems directly influence driving dynamics and the parameters leading up to an accident. On the other hand, passive safety systems primarily seat belts and airbags usually only function directly in response to the collision event. Driver assistance systems that intervene directly are intended to help avoid accidents, or at least reduce the severity of an accident. Passive restraint systems help reduce the severity of potential injuries due to a collision. To be effective, active vehicle safety systems require ongoing data about the surroundings (driver, vehicle and environment). Most passive restraint systems, on the other hand, only use the information after first contact in a collision and are very limited in their ability to adapt to different occupants and accident events. Today, both groups of systems work independently and also access different sensor data. Driver assistance systems use environmental data that correlate the driving dynamics of the vehicle with environmental conditions and the driver s reactions (steering, braking, acceleration). The difference between the systems becomes clear when their time horizons are compared. While active systems can influence driving dynamics in periods up to several seconds, passive safety systems react over a very condensed time window of up to 120 milliseconds, for example during a frontal collision. The question arises, however, of how a passive safety system could function if it is activated before a collision. In light of this, the traditional separation into passive and active safety will have to be overcome. Reliable sensor data from the pre-collision phase can be used to estimate the severity of the impending accident, and this information can be used to design a restraint system that activates before the collision proper leading to improved interaction between the occupants and the restraint system. Ideally, the design works on a sort of control circuit, which modifies the functionality of the seat belt, airbag, seat and steering wheel / steering column based on pre-collision sensor data so as to provide optimal protection to each occupant. In this connection, there are various parameters for classic passive restraint systems yet to be developed that can be modified as the accident happens.

161 161 Potential modifiable parameters having an influence on the functionality of passive restraint systems Airbag systems Variable airbag size Variable airbag deployment velocity Pressure increase and drop-off that can be regulated Airbag textiles adaptive to tension Variable deployment based on size of occupants and severity of accident Seat belts Variable seat belt stretching and influencing of belt forces Variable tensioning speed, including pre-tensioning Position of the seat belt buckle can be changed during collision Seats Adjustable upholstery stiffness Pre-positioning of the seat in an ideal accident position Steering wheel/ column Pre-positioning of the steering wheel in an ideal accident position An example is the combination of driving dynamics data from the ESP control circuit with a reversible belt tensioner. In this case, exceeding a critical driving dynamics limit value (e.g., extreme acceleration) activates the electronic stability program and simultaneously pre-tensions the seat belt. This gives the occupant advance protection before the vehicle collides with an obstruction or another vehicle. This system has been available on the market for years and represents a first step toward the symbiosis of active and passive safety systems. Other versions of this approach additionally provide for changing the position of the seat before an impending collision so as to better position the occupant in front of the steering wheel or airbag. Data collected from the ESP can be fed into the belt tensioner Reliable environmental analysis is a key factor in the development of future applications that successfully incorporate symbiosis of active and passive safety systems. This also requires that reliable sensor data be fed into the electronic algorithms so as to control or initiate the appropriate systems based on the given situation.

162 162 Sa f et y a n d Tec h n o lo gy Headlight Technology Seeing and Being Seen Seeing and being seen play a special role in traffic safety. Functioning lighting equipment on motor vehicles and trailers is therefore an important element of active traffic safety, particularly headlights and taillights. In this regard, there is a perpetual conflict of interests between good illumination of the roadway for the driver, and potential blinding of oncoming traffic. The laws and regulations in place today ensure traffic safety. Daytime running lights represent another contribution to safety. Daytime running lights LED lights are part of vehicle design and function with low energy consumption Daytime running lights are now often implemented as LEDs, which also allow for new design options, in addition to low power consumption. Vehicle designers now use daytime running lights to give their vehicles an inimitable appearance, including in the dark. To this end, they use innovative LED technology with fiber optics, which reduces the use of electrical energy and, indirectly, fuel consumption. New vehicles will be required to have daytime running lights according to the following schedule: Vehicle categories M1 (passenger cars) and N1 (light industrial vehicles): from March 1, 2011 Vehicle categories M2, M3, N2, N3 (buses, large transport vehicles) from September 1, 2012

163 163 Full-beam headlight assistance system Driving with the full beams on is intended to illuminate the roadway as evenly as possible. Full beams may only be used when there is no oncoming traffic or vehicles driving ahead that may be blinded by them. Automatic switch-off of full beams when oncoming traffic is present Although in Central Europe, full beams are used less frequently due to high traffic density, the situation is different in Scandinavia, where the population is more scarce. The full-beam headlight assistance system increases the safety of driving at night considerably. A camera recognizes oncoming traffic or vehicles driving ahead and automatically switches between low beams and full beams. The VDA and international agencies are also collaborating to produce a technical regulation that would provide for only the right side of the roadway being illuminated with full beams when oncoming traffic is present; this would allow drivers to recognize potential obstacles at a greater distance. Olaf Schmidt, Lighting, Engineering and International Legislation, HELLA KGaA Hueck & Co. (Chairman of the Standards Committee for Light Technology) Innovations in lighting technology are extremely important for vehicle safety and design.

164 164 Sa f et y a n d Tec h n o lo gy Revision of Vehicle Inspection Regulations In Germany, regular inspection of vehicles for safety deficiencies has been legislated since Every motor vehicle owner must have their vehicle inspected in accordance with the intervals established by law. 29 of the Vehicle Safety Regulations (Straßenverkehrs Zulassungs-Ordnung, StVZO) describes the applicable framework conditions. Comparable regulations exist in all European Union countries, the USA and other states. To satisfy EU requirements and accommodate further development of vehicle technology, the German Federal Transport Ministry intends to revise the vehicle inspection criteria. The aims are to amend technical progress, and to increase the objectivity and test depth within the general inspection. The revision is focusing on inspection of electronic systems and their installation in the vehicle, improved brake function inspections and a unitary description of defects. The VDA supports the efforts of the ministry to increase the reliability and efficiency of vehicle inspections, and has actively participated in designing and revising the inspection procedures. Inspection of electronic systems The automotive industry already offers drivers the greatest possible level of safety by way of comprehensive diagnostics for functions and control devices in the vehicle. Relevant faults are displayed to the driver and service station. The VDA is making important contributions to the revision of vehicle inspections The VDA has developed a procedure for vehicle inspections that evaluates the electronic systems; it is based on the vehicle s own monitoring, on-board diagnostics (OBD), and enables assessment of the safety systems and functions via the vehicle s diagnostics interface. The procedure is based on standardized ODX diagnostic data pursuant to ISO 22091; the inspection device and the vehicle communicate via a standardized interface pursuant to ISO This procedure will be used in vehicle inspections beginning in 2012 to assess the installation of the relevant control devices, and from 2014, additionally to inspect the effective status of the entire safety system, including software functions. The new procedure also ensures that the inspection does not cause any system errors that can result in harm to persons or the vehicle.

165 165 Revision of the brake function inspection carried out during vehicle inspections To make the brake inspection more reliable, the VDA is working with technical advisers at the Federal Transport Ministry to develop an evaluation procedure that also includes assessment of the distribution of braking forces between the front and rear axle. Approved status of brakes must be ensured for the entire vehicle lifetime In the future, braking force will be determined by axle on the dynamometer. The new procedure provides for comparison of the measured braking forces with the reference values provided by the manufacturer (e.g., maximum pedal pressure and minimum distribution of braking forces between front and rear axles). The goal is to ensure that the brake system remains fault-free and functional for the lifetime of the vehicle. Revision of the vehicle inspection fault tree As part of revising the vehicle inspection process, the fault tree used to describe and classify faults has been refined and standardized across all inspection organizations. This will allow better comparability of fault statistics in the future. Manufacturers receive valuable information for development Additionally, manufacturers receive more information that they can use to analyze faults occurring during operation. This information is then reflected in the development process used by vehicle manufacturers. The VDA has already begun introducing the described procedure into the hardware and software architecture in vehicles. This also applies to the required checking of functions and field test assessment procedure, along with advisory services and monitoring organizations. Evaluation of the test procedures is ongoing

166 166 Sa f et y a n d Tec h n o lo gy Theft Prevention Criminal behavior is a problem affecting all of society and one which unfortunately extends to vehicle theft. Over the last 15 years, the theft rate has decreased by more than two-thirds thanks to continuous improvement in mechanical and electronic theft prevention measures in vehicles and close collaboration between manufacturers and police. In 2008, however, the number of permanently lost vehicles has begun to rise again. Since the record of more than 60,000 permanently lost vehicles in 1993, the number of thefts fell to below 20,000 in 2006, mostly thanks to improved theft prevention measures. During that time, vehicle thieves began to operate differently; whereas amateur thieves would previously go joy riding, theft today is perpetrated mainly through organized groups that specialize in certain models. This is the reason the name of the statistic was changed from sought by police to permanently lost. The main reasons behind recent rises in the statistics for theft of passenger vehicles are related to expansion of the EU borders within the framework of the Schengen Agreement. Thieves can drive undetected to the external borders of the European Union before being subject to any inspection. The groups of perpetrators are also increasingly armed with technical equipment. Vehicle thefts 160, , , ,000 80,000 60,000 40,000 20, Records of searches conducted Missing in the long term Source: BKA

167 167 The German Federal Interior Ministry has approached the VDA in connection with combating vehicle thefts and both are working together to emphasize the importance of further developing and promoting modern vehicle anti-theft technologies and location technologies. The Federal Interior Ministry has also given a catalog of potential improvements to the VDA, the German Federal Police and the Umbrella Organization for the German Insurance Industry, (Gesamtverband der Deutschen Versicherungswirtschaft). Potential measures include vehicle location systems, improved electronic software and parts markings. Theft prevention only works when everyone involved works together. This is why the VDA is calling for: a unitary system for recording and analyzing thefts across the EU, including theft mechanisms, as well as a Europe-wide, transparent access authorization system for vehicle manufacturers, more intensive collaboration between manufacturers and police with a view to investigating theft mechanisms and causes, and quick access to manufacturer information, better promotion of ongoing theft prevention projects in order to record the greatest possible number of stolen vehicles in manufacturer databases, networking of registration points across the EU to prevent multiple registration of identical VINs (Vehicle Identification Numbers), provision via vehicle registration agencies of information about scrapped vehicles or regarding total damages in Germany and the EU in order to record this information in manufacturer databases according to VIN, collection of vehicle documents for total accident damages, EU-wide prohibition of electronic diagnostic devices that aid vehicle theft or fraud while posing as repair systems, clarification of the question as to the extent to which the regulations on acquisition in good faith can be implemented consistently across the EU, vehicle inspections by the police on a regular basis, especially in areas close to the border.

168 168 Sa f et y a n d Tec h n o lo gy New Directive for EC Type Approval Operating licenses for motor vehicles to be governed unitarily across Europe The EU Commission published Directive 2007/46/EC on EC type approval to create a framework for approval of motor vehicles and trailers, as well as systems, components and independent technical units (Framework Directive 2007/46/EC). This directive will replace the national General Operating Licenses in the EU member states and extend type approval to all vehicle categories. On the basis of joint agreements, the member states announced their common desire to move ahead with harmonization of member states laws on motor vehicles and parts; the intention is to reduce trade barriers and distortions in the competitive landscape. Currently three framework directives describe the procedure for EC type approval and the EC operating license for specific vehicles: Thomas Berenz, Adam Opel AG, Manager Global Type Approval & Certification (Chairman of the Type Approval Working Group) From the first project proposal through the end of production, the homologation teams support all involved areas. Our testing services and approval agencies ensure that our new technologies are granted approval worldwide. A new procedure should recognize the different character of industrial vehicles a) Directive 2007/46/EC, which creates a framework for approval of motor vehicles and their trailers, as well as systems, components and independent technical units (previously 70/156/EEC on type approval for motor vehicles and their trailers) b) Directive 2002/24/EC (previously 92/61/EEC) on type approval for motor vehicles with two or three wheels c) Directive 2003/37/EC (previously 74/150/EEC) on type approval for agricultural and forestry tractors. Holders of such an approval are accorded extensive rights and, along with them, great responsibility. A holder of this approval can manufacture any number of identical vehicles. The type approval system The community system of type approval in the EU is the only way to ensure that ongoing production takes place in accordance with the relevant laws. Type approval is based on the principle that for each manufactured vehicle, the manufacturer must issue a certificate of conformity that attests to the vehicle corresponding to the approved type. This directive also introduces a new method for EC type approval, namely the multistage approval process. This is intended to take into account the particularities in the manufacture of industrial vehicles. Within the type approval system put in place by 2007/46/EC, it is also possible to apply ECE (Economic Commission for Europe) regulations instead of EC Directives. ECE regulations are annexes to the amended UN/ECE Agreement of 1958 on the adoption of uniform technical prescriptions for wheeled vehicles, equipment and parts, and the conditions for reciprocal recognition of approvals granted on the basis of these prescriptions. The parties to this agreement themselves determine which of the over 100 ECE regulations they want to apply in their sovereign territory. Parties to the agreement are Members and include many European states, the EU by way of accession of all member states, and more recently Japan and Australia. The USA has not acceded to the agreement. The regulations themselves contain provisions for granting type approvals and the reciprocal recognition of the approval marks. The procedure by which a manufacturer can receive an approval pursuant to an ECE regulation is not fundamentally different to the procedure in place for EC type approvals and EC operating licenses.

169 169 Based on the individual ECE regulations, ECE approvals can be granted for a motor vehicle type in respect of a certain matter; for example, for the braking system or a particular part, such as a light bulb or headlight, for a vehicle type. Under the ECE regulations, no overall type approvals can be granted for vehicle types, contrary to the case for EC Directives. Type-differentiating characteristics (Annex II) Annex II Definition of terms for motor vehicle classes and vehicle types defines the following motor vehicle classifications: Delicate negotiations with the EU to avoid new bureaucracy Class M: motor vehicles designed and built to transport persons, having at least four wheels. Class N: motor vehicles designed and built to transport goods, having at least four wheels. Class O: trailers (including articulated trailers). The EU Commission proposed amending Annex II to limit the system of type differentiating characteristics previously in place, which would place an increased documentation burden on applicants. The VDA expressed its desire to retain the original type-differentiating characteristics and tirelessly represented this position to the commission. After delicate negotiations, a solution satisfactory to manufacturers of passenger vehicles and trailers was found; for industrial vehicles, however, the new system will lead to a greater documentation burden. The proposal was promulgated by the Technical Committee Motor Vehicles (TCMV); publication in the Official Journal of the EU is to follow. General Safety Regulation (GSR) The commission has unified the existing EC Directives on vehicle safety under a vehicle safety Directive (General Safety Regulation, GSR), including the EU program CARS 21. Introduction of the GSR will change the system of EC Directives. Existing EC Directives will be replaced by ECE regulations. The EU wants to implement a General Safety Regulation for quantities and dimensions The two existing EC Directives on quantities (weights) and dimensions for passenger vehicles and motor vehicles are being unified under the umbrella of the GSR. VDA has accepted the challenge and developed a solution that takes into account the maximum differential for dimensions and weights across member states by including a provision in the proposal. This recommendation served as the basis for a commission recommendation, which did not include this provision, however. Due to the different measures and dimensions in the EU member states, consultations began first regarding motor vehicle categories M1/N1 (passenger vehicles / light industrial vehicles). According to the EU Commission, technical consultations have been completed. Consultations for the other categories (buses / transport vehicles) should begin soon; however, the other consultations were delayed due to unresolved questions related to cross-border commerce. Under Directive 2007/46/EC on type approval for motor vehicles and their trailers, as well as systems, components and independent technical units for these vehicles (framework Directive), the member states are no longer permitted to approve and allow national exceptions. Approval pursuant to Directive 2007/46/EC also allows approval in all member states of the European Union. The new Directive on measures and dimensions will not be another appendix to Directive 2007/46/EC, but rather will be published as a separate regulation.

170 170 Sa f et y a n d Tec h n o lo gy Technical Harmonization of Radio Frequencies The type approval regulation for motor vehicles (Directive 2007/46/EC) harmonizes the technical requirements applicable to motor vehicles. This was first accomplished in 1992 with EC Directive 92/53/EC Type approval for motor vehicles. Radio frequencies, however, remained outside these harmonization efforts. Currently, national requirements continue to apply. Harmonization requires elimination of national differences; many frequencies are also used by the defense institutions of the member states and are subject to confidentiality. Radio frequencies serve to transmit information from a transmitter to a receiver. Examples are keyless entry on cars, keyless engine ignition ( keyless go ), communication between passenger cars ( car to car ) and wireless Internet (WLAN). The EU member states, which are largely responsible for their own frequency resources, have already recognized the importance of joint EU policies in this area to support organization and smooth functioning of the domestic market. In light of this, VDA is calling for rapid harmonization and establishment of specific frequencies for new technologies in order to guarantee operation without interference. A working group composed of members of the associations ACEA and CLEPA has already begun work in this area. Designation of specific frequencies or frequency ranges forms the foundation for interference-free operation. The VDA is also making international efforts to harmonize frequencies; a working group founded for this purpose has already yielded initial results. The national VDA working group on radio approvals will contribute its knowledge and expertise to the international working group.

171 171 sim TD More Safety and Environmental Protection The IT and communications technologies in vehicles make an important contribution to increased mobility and avoidance of traffic accidents. These systems open a whole new dimension of predictive driving. For example, cars can share information, where there are traffic jams, whether an obstacle is concealed around a corner or if the road surface is slippery (car-to-car communication, C2C). Vehicles can also share information with the traffic infrastructure (car-to-infrastructure communication, C2I) to make following vehicles aware of dangers in advance. Vehicles communicate with other vehicles and traffic direction systems In future, information exchanged between car-to-car intelligent systems or with infrastructure (car-to-x communication, C2X) will save lives. In Germany alone, the EU Commission estimates that traffic jams are responsible for annual costs to the economy of around 17 billion euros. Better traffic flow supported by C2X communication allows for better load distribution over the existing roadway network. This reduces fuel consumption and CO 2 emissions. Since 2008, automotive manufacturers, suppliers, telecom companies, the public sector and actors in politics have been preparing a large-scale field test to try out C2X communication technology, namely the project Safe Intelligent Mobility Test Area Germany (sim TD ). The focus is on driving and traffic safety and efficiency, and effects on users. Test area Frankfurt / Rhine-Main The biggest challenge in C2X communication is the interplay between automotive engineering, transmission technologies and traffic direction. The VDA started sim TD to research these factors in a real life situation. For four years, the Rhine-Main region around Frankfurt has been built up to serve as the sim TD test area to test C2X communication technology; 2011 marked the beginning of the actual test in this area. Interplay of automotive technology, transmission technology, and traffic control. The largest practical test to date on highways and federal and state roads intends to investigate traffic scenarios under realistic conditions. The vehicles form a sort of ad hoc network and exchange with one another relevant data about traffic events. At the same time, they inform the infrastructure, which forwards messages it receives to both vehicles in the area and a traffic center. The latter then sends back information and relevant messages to vehicles and the infrastructure. One focus of sim TD is to test the mobile communications network. The European Union has already approved for vehicle communication the frequency spectrum between and GHz for standard use across Europe. Technically, it is based on expanding the WLAN family IEEE to take into account automotive requirements. Vehicle manufacturers are helping to adapt this standard to European framework conditions under the aegis of the European Telecommunications Standards Institute (ETSI). Parallel to this, the sim TD project will investigate the use of mobile telecommunications (UMTS) to transfer C2X messages. This is intended to avoid connection gaps and increase geographical coverage, since safety information should be made available within fractions of a second. Protection of the private sphere is equally important and is supported by using pseudonyms for data transfer. In addition to cryptographic mechanisms to protect data integrity, authenticity and confidentiality, other measures will be implemented that will evaluate the vehicle movement data for plausibility.

172 172 Sa f et y a n d Tec h n o lo gy Launching the big sim TD experiment Weak points should be identified quickly and remedied A selection process defined 21 functions that will be used in the field test to assess the relevant aspects of C2X communication. These selected main functions were modeled using Unified Modeling Language (UML) and integrated into the system. The next step was to develop the overall system architecture, which is based on three central subsystems. Vehicles, infrastructure and the overarching test system. They all take into account safety and efficiency applications, cost factors, requirements for potential small-scale serial production at a later time, the characteristics of available systems and the expectations of the partners involved. The subsequent implementation phase was based on the system architecture that had been specified and included implementation of basic versions of subsystems and components. At the end of November 2010, a sim TD status seminar was held on the sim TD dynamometer to demonstrate initial versions of the subsystems in the vehicle and infrastructure, and in interaction with the test center. The project is now focused on integrating all components into the overall system. In this effort, the Human Machine Interface (HMI), measurement data collection, core communication functions, the functional term environment and the test system play a central role. Traffic Acquisition of traffic situation and supplementary information/basic services Data acquisition relating to infrastructure Data acquisition relating to vehicles Determination of traffic weather conditions Determination of traffic conditions Identification of traffic incidents Traffic (flow) information and navigation Road forecast Construction site information system Extended navigation Travel and safety Local hazard warning Obstacle warning Traffic jam warning Road weather warning Utility vehicle warning driver assistance Traffic sign assistant/warning Traffic light phase assistant/warning Linear guide assistant Junction / cross-traffic assistant Supplementary services Internet access and local information services Internet-based service usage Location information services Traffic (flow) control Diversion management Light signal systems network control Local traffic-dependent light signal systems control sim TD aims Project Concept sim TD - functions

173 173 The next step is to network both the vehicles and infrastructure in the region. This will complete the requirements for C2X communication and data exchange, allowing the large-scale test to begin. Practical tests will help investigate the uses of C2X communication and identify relevant weak points early, so they can be remedied. This is a fundamental condition before C2X systems can be brought to market; sim TD is thus another step toward safe, intelligent mobility. Project partners and promoters The project was initiated by VDA with the following companies playing a leading role: AUDI, BMW, Daimler, Ford, Opel, Volkswagen, Bosch and Continental. Other project partners include Deutsche Telekom, the Department of Roadways and Traffic for the state of Hessen, and the city of Frankfurt. sim TD is also supported by the Technical and Business University of Saarland (Hochschule für Technik und Wirtschaft des Saarlandes), TU (Technical University) Munich, TU Berlin, the University of Würzburg, the German Artificial Intelligence Research Center (Deutsches Forschungszentrum für Künstliche Intelligenz, DFKI) and the FOKUS, SIT and IESE institutes of the Fraunhofer-Gesellschaft. The project is sponsored by the German Federal Ministries of Commerce (BMWi) and Research (BMBF), as well as the Federal Ministry of Transport (BMVBS) and the state of Hessen. Large automotive manufacturers and suppliers support the project sim TD ITS Central Station sim TD Car-to-X Communication Channels Car-to-X standard (IEEE p) WLAN (IEEE b/g) UMTS sim TD Communication channels Observation data Surrounding environment data Traffic data ITS vehicle station (IVS) Car-to-car communication ITS vehicle station (IVS) Car-to-infrastructure communication ITS roadside station (IRS) Light signal system (LSA) Traffic change sign (WVZ) Traffic message channel (TMC) sim TD Test Center Hesse Traffic Center (VZH) Integrated overall traffic control center Frankfurt am Main City (IGLZ) Provincial reporting center Police Service Provider sim TD Technology Communication processes in the Germany test environment sim TD test center

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175 Quality Management Anna Trenscke assistant tank filler systems, Veritas AG, Gelnhausen

176 176 Q ua lit y M a n ag e m e nt Quality Management Quality as a strength of the German automotive industry This year, as in the last few years, the products of the German automotive industry come out on top in the established quality indicators. In the individual mark for Quality in AutomarxX, the automotive brand study published half-yearly by the ADAC, last year s excellent performance by German manufacturers was again confirmed by the present ranking. Brand image Market strength Customer satisfaction Product strength environment Safety Total result rank BMw Audi Mercedes-Benz Skoda Volkswagen Volvo Toyota Porsche Honda Seat Mazda Subaru Jaguar Mitsubishi opel Ford Mini Citroën Hyundai Peugeot Lancia Nissan Saab KIA Suzuki Alfa romeo Source: AdAC-Infogramm

177 177 In the Dekra Faults Report 2010, the majority of models in the relevant period-of-use categories are German manufactured. This tallies with the AutoMarxX result. As in previous years, the top places are occupied by German manufacturers. These indicators show that the German automotive industry still continues to produce with the highest possible quality and reliability now that the factories are once again working to capacity with high volumes. The quality offensive of German car manufacturers and their suppliers has proved a sustained effort and is continuing to be effective. The methods and tools developed and continuously optimized in the VDA by manufacturers and suppliers, also as a part of the quality offensive in 2010, have become recognized standards in automotive construction. The foundation was laid in the VDA s Quality Management Committee (QMA). The QMA, whose office is the VDA QMC (Quality Management Center) in Berlin, steers quality management activities in the automotive industry and thus promotes the idea of quality along the whole of the value added chain. Fields of activity of the VDA QMC The development of the VDA QMC s methods and tools takes place in the QMC working groups. These are steered by the QMA and play a decisive role in quality management in the German automotive industry. The results and knowledge from the working groups are documented in the VDA QMC series of publications. In 2010 the following volumes were published: VDA 4 (ring bound) / 2nd revised and extended edition 2009, updated March 2010 Quality assurance in the Process Landscape General, risk analyses, methods, process models VDA 5 / 2nd completely revised edition 2010 Suitability of testing processes Suitability of measuring systems, suitability of measuring and testing processes, expanded uncertainty, conformity assessment VDA 6 Part 1 / 4th revised edition, updated and reprinted 2010 QM System audit Based on DIN EN ISO 9001:2008 and DIN EN ISO 9004:2009 VDA 6 Part 3 / 2nd completely revised edition, June 2010 Process audit Product development process / Serial production Service development process / Service implementation VDA 9 / 3rd completely revised edition 2010 Emissions and Fuel Consumption CoP tests on passenger cars VDA 19.2 / 1st edition 2010 Technical Cleanliness in Assembly Surroundings, logistics, personnel and assembly equipment Car Washes / 1st edition 2010 Criteria for car washes conforming to VDA specifications VDA Compilation of Standards for Customer-specific QM System Requirements Based on ISO/TS / 1st edition Contents, documentation and explanatory notes -

178 178 Q ua lit y M a n ag e m e nt Dissemination of VDA QMC publications among VDA members Some 19,000 or more VDA QMC books were sold in 2010, 15 percent of them in the English language. Twenty percent of the member firms of the VDA have the license to download VDA QMC books via the QMC Portal and then make them available to their employees on the firm s own Intranet. This way of using and disseminating VDA QMC publications is the preferred method of big OEMs and suppliers, among others. In 2010, 65 percent of VDA members who are suppliers purchased more than one VDA QMC publication, either in printed form or by accessing the portal and downloading. As well as its task of organizing the work of the working groups, its documentation and its publications as a series, the VDA QMC is also the contractual partner of the certification companies recognized by the QMC. Here, the QMC s duties include worldwide monitoring of certification schemes in the form of so-called Witness Audits and Office Assessments. In addition, the content already developed by the working groups is made directly available to member enterprises in the form of training sessions by the VDA QMC. Self-conception and business sectors in the VdA QMC QMC China QMC China Beijing Shanghai established on June 27, 2006 Business sectors Training and advanced training Meeting Publications Qualification of suppliers Personnel 14 permanent employees 4 assigned advisors and trainer Head: Helmut Stein Supplier 1 Supplier 2 Supplier 3 OEM 1 OEM 2 OEM 3 Master contract for qualification of suppliers Supplier 4 Qualification of suppliers Source: VdA QMC

179 179 The Aral car wash in Bochum, which was awarded the VDA Seal of Approval: (l. to r.): Jörg Peter Kubiak, in charge of the car wash business at Aral, Heinz-Günther Plegniere, Head of VDA QMC, and Hartmut Ide, leader of the project at QMC on VDA conformity of car washes VDA-compliant car washes As of June 2010, manufacturers of car wash installations, cleaning chemicals and washing materials that conform with VDA criteria can register their products online in a database maintained by the VDA QMC ( Since July 2010, the operators of car wash installations can also apply online for the VDA Seal of Approval via the Internet. The first Seal of Approval was awarded to an ARAL filling station in Bochum on August 18, 2010; by the cut-off date of October 31, 2010 more than 300 seals had already been awarded. From 2011, compliance with criteria will be checked by inspections of car wash operators, carried out by car wash inspectors who are trained and certified by the VDA QMC. In parallel, manufacturers of car wash products and chemical products will undergo an audit by experts authorized by the VDA QMC. Activities for quality management in the VdA QMC russia QMC russia Moscow established on october 14, 2008 Business sectors Training and advanced training Meeting Publications Personnel 8 permanent employees Head: wadim Gasmann By government decision* for enforcing higher degrees of localization for foreign automobile producers Import customs duty on components: Instead of 5-15%, reduced to 0-3% If the manufacturers undertake to provide specific production volumes and a high proportion of localization Both are to be brought about within a set number of years. either find suitable qualified local suppliers, or Qualify the local suppliers Area of negotiation for a VdA QMC branch for supporting the German automobile industry * Government decision No. 166 of 2005 (relating to industrial installation) for the promotion of greater investments in the automobile industry (including the supplier industry) Source: VdA QMC

180 180 Q ua lit y M a n ag e m e nt Status of personnel certification Automotive SPICE The growing requirements for reliability in our products and the constantly increasing proportion of software-based elements in our vehicles make it essential to improve software development processes. Automotive SPICE is an assessment model adapted for use in the automotive field, and is used for the consistent evaluation of software development processes. The Automotive SPICE process assessment model was developed in consensus with European automobile manufacturers. The aim of the VDA QMC s participation with regard to Automotive SPICE is to establish criteria for implementing and recognizing process evaluations of the development of software-controlled systems on the basis of Automotive SPICE, i.e., the automotive industry bases itself on a reliable standard when carrying out assessments with Automotive SPICE the results of assessments are comparable and reproducible evaluation results such as CMMI can be included, the VDA standard is to be generated on the basis of Automotive SPICE German translation of Automotive SPICE is available as a VDA publication acceptance in the international automotive industry Automotive SPICE assessor certificates I/04 II/04 III/04 IV/04 I/05 II/05 III/05 IV/05 I/06 II/06 III/06 IV/06 I/07 II/07 III/07 IV/07 I/08 II/08 III/08 IV/08 I/09 II/09 III/09 IV/09 I/10 II/10 III/10 IV/10 Source: VDA QMC

181 181 Following a strong rise after the commencement of certification activities at the beginning of 2008, the VDA QMC recorded a continuous increase in the number of assessors registered worldwide in 2009 and On the cut-off date of September 30, 2010, exactly 442 assessors were registered, of whom 409 are active. Year on year this represents a growth of 16 percent compared to the previous year. The growth in the number of assessors is mainly due to the expansion of international activities for the training of experts and managers based on the Automotive SPICE process model. Increased interest was noted in Asia and especially in Japan. Worldwide distribution of Automotive SPICE assessor certificates Good acceptance and high profile Processing and intensification First activities started Japan 60 Austria 11 Germany 280 USA 11 Korea 7 Italy 6 Liechtenstein 4 Switzerland 4 Poland 3 France 3 Mexico 2 Romania 2 Great Britain 2 Czech Republic 2 Luxembourg 1 Hungary 1 Finland 1 Korea 1 Source: VDA QMC

182 182 Q ua lit y M a n ag e m e nt Present state of certification according to VDA 6.x and ISO/TS In 2010 an increase was recorded in the number of production sites certified according to quality management standard ISO/TS worldwide. On December 31, 2010, more than 42,000 production sites were certified in accordance with this QM system standard. This represents a growth of 4 percent compared to the previous year. There is a continuous demand for this certification in Asia, whereas the number of certified production sites in Europe and North America remains largely the same. However, with regard to certification, a high degree of penetration of the automotive supply chain already exists in these regions. Of the five International Automotive Task Force (IATF) Oversight Offices, the VDA QMC is the largest IATF Oversight Office in terms of numbers, with more than 20,000 certificates coming from the 17 certification organizations authorized by the VDA QMC. This constitutes a 47 percent share of all valid ISO/TS certificates worldwide. For suppliers, certification according to ISO/TS continues to represent the admission ticket to the automotive supply chain. However, enterprises in the third tier and further upstream in the supply chain are also increasingly recognizing the usefulness of certification according to the quality management standard ISO/TS Seminars and in-service training After demand for our seminars got off to a fairly slow start at the beginning of 2010, we had record figures in the second half of 2010 compared to previous years, for both public and in-house training. This strong demand was mainly ascribable to training sessions for the revised VDA Standard 6.3. Not only were the upgrade seminars from VDA 6.3 (old) to VDA 6.3 (new) extremely popular; there has also been a great deal of interest so far in new qualification for VDA 6.3 Auditors. Here, many participants made it a priority to complete the training by taking part in the certified examination day. The new qualification concept made it possible for many participants who received training from external service providers in previous years to convince themselves of the quality of training under the aegis of the VDA QMC in Distribution worldwide of the 41,072 in-date ISO/TS-16949:2002 certificates Status: North America 5,350 locations (13% of all certificates) USA 4,239 Mexico 975 Canada 530 South and Central America 1,454 locations (4% of all certificates) Brazil 1,071 Europe 9,895 locations (24% of all certificates) Germany 3,197 France 1,090 Italy 1,069 Spain 896 Great Britain 598 Czech Republic 551 Middle East 1,407 locations (3% of all certificates) Iran 766 Turkey 598 Africa 440 locations (1% of all certificates) Asia/Pacific 22,516 locations (55% of all certificates) China 12,038 Republic of Korea 3,945 India 2,658 Japan 1,194 Thailand 955 Taiwan/ROC 802 Source: VDA QMC

183 183 As well as VDA 6.3 and re-qualification courses for the prolongation of VDA 6.1, VDA 6.2 and VDA 6.4 certificates, there was also once again a great demand for seminars on ISO/TS This training development was also reflected in the in-house training sessions with an increasing trend here towards courses with customer-specific content in addition to the standard seminars. Internationally, the picture for 2010 is a mixed one. New training contracts were set up with institutions in Poland, Austria and Hungary. In South Africa we had to re-orient with regard to a licensee, and the cooperation with the licensee in Argentina came to an end. At present talks are taking place in North America, France and India, in order that the demand for training on VDA Standards can soon be met in these countries, too. II. Qualification matrix for Process Auditor VDA 6.3 on the basis of the processes in the supply chain Planned area of use Process Series production Process Entire supply chain Process Product development Process Product development Precondition Basic knowledge QM Basic knowledge QM Basic knowledge QM Basic knowledge QM Module A General basics for Process Auditors 2 days incl. learning check (1h) 2 days incl. learning check (1h) 2 days incl. learning check (1h) 2 days incl. learning check (1h) Module B I Process audit Series production 1.5 days incl. learning check (1h) Module B II Process audit Product life cycle 3 days incl. learning check (1h) Module B III Process audit Product development 1.5 days incl. learning check (1h) Module B IV Process audit Process development 1.5 days incl. learning check (1h) Process Auditor VDA 6.3 Series production Process Auditor VDA 6.3 Production cycle Process Auditor VDA 6.3 Product development Process Auditor VDA 6.3 Process development Module C optional Certified Process Auditor with Auditor Card and certificate 1 day examination (oral and written) Module D Upgrade training (VDA 6.3 old to VDA 6.3 new) 2 days incl. learning check (1h) As can be seen in the matrix, there are four different routes to qualification, each of which differs in the modules, approval conditions and final qualification procedures. Source: VDA QMC

184 184 Q ua lit y M a n ag e m e nt Events Following on from the successful start of the series two years ago, the Quality Management Symposium held in Frankfurt on April 28 and 29, 2010 centered around the two further developed VDA standards VDA 6.3 and the newly founded working group on Customer-specific requirements and the ISO/TS (CSR). As in the previous two years, this now tried-and-tested format provided an opportunity to hear informative lectures about new developments and further progress in quality management standards. About 180 participants were divided up between seven different workshop themes, tackling current working group topics in order to bring in practical experience and exchange information. Two main focuses of the event were information from the International Automotive Task Force (IATF), and further development of the international QM system standard for the automotive industry ISO/ TS 16949:2002. The VDA QMC Expert Forum at IAA 2010 in Hanover followed up the positive response of the three previous years with a new record attendance for a IAA Commercial Vehicles, and provided more than 100 participating manufacturers and suppliers with a platform for the presentation and discussion of current quality management topics. The lectures, which were completely booked out, focused on the process audit standards VDA 6.3 elaborated in the VDA QMC. With these events, the VDA QMC reaches about 600 quality managers and experts in discussions every year.

185 185 On November 17 and 18, 2010 the quality managers of well-known manufacturers and suppliers from the automotive industry met at the Porsche works in Leipzig for the 7th VDA QMC summit meeting. Under the motto Global challenges on the way to the summit numerous lectures were given on quality topics of current interest. Porsche provided the setting for the occasion, with driving events and guided tours of the works. The focus was on quality in the international supply chain, centering on the emerging markets and upon India in particular. The date for the 8th summit, to take place in Berlin, has been fixed for November 21 and 22, The theme of the event will be 125 years of quality in automotive design rapid development brings future challenges.

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187 Logistics Osman Yasar smelter, shift supervisor smeltery, Schweizer Group Plattenhardt KG

188 188 Lo g i sti c s The Logistics Situation in the Automotive Industry German logistics industry is number one in the world for punctuality and quality In Germany, the logistics industry employs a significant number. Currently 2.7 million people are employed in logistics. Germany is the most successful logistics country in the world and occupies first place in the World Bank logistics ranking. The industry is the world leader for punctuality and quality. All parties involved in the automotive industry come together in automotive logistics: the manufacturers and suppliers with their decision-makers in automotive production and logistics, the logistics service providers offering IT and carriage services, as well as the manufacturers of cargo carriers for the automotive industry. Even within the logistics and courier industry, the automotive industry plays a large role: one in three companies in this industry works in automotive logistics, according to the German Courier and Logistics Association (Deutscher Speditions- und Logistikverband, DSLV). After the economic collapse, dealing with the rapid recovery was the next big task In 2010, after the automotive industry had to accept serious collapse in 2008/2009 in the wake of the global economic and financial crisis, the logistics industry set itself wholly new challenges, contrary to original prognoses growth of domestic passenger vehicle production by more than 12 percent. Last year, maintaining the supply chains was the most important task. The crisis in 2008/2009 reduced production and human resources capacities, which quickly had to be adapted to the growing demand in order to allow production to ramp up. Introducing part-time work has greatly helped this situation. As the economy improved again, companies were able to draw on their experts. The dramatic growth in Asia, and China in particular, also ushered in a geographic shift of target markets and changed customer requirements. The supply chains first had to be adapted to these new conditions. Increased reliance on air freight was necessary to maintain supply chains In April 2010, the economic recovery led to temporary bottlenecks in supply chains. In this situation, many companies relied on air freight to keep the supply chain on schedule. Against this background, the erupting volcano in Iceland had a serious impact on air travel for about two weeks. This unforeseen circumstance dramatically illustrated what can happen when external factors intervene in sensitive supply chains. The fabric connecting procurement and production logistics with transport suppliers (the supply chain) was disrupted significantly. The situation shows how closely the individual subprocesses are scheduled and interrelated, and how much carriers rely on each other, such as transport vehicles, rail, ship and aircraft. This example also illustrates the consequences disruptions in transport processes can have on our economy.

189 189 The supply chain was maintained, but only because all involved worked in a coordinated and synchronized manner. The flexibility requirements and pressure on logistics managers were immense but they rose to the challenge masterfully. Thanks to the demand for products made by German manufacturers, which has fortunately remained high, we are continuing to experience a tense supply chain situation. Optimizing internal logistics processes and those occurring between companies are key to maintaining standing in the stiffly competitive international automotive markets, though they are not the only measures. Cooperation among all parties in the supply chain is the key to successful logistics. The last two years have shown how important stable relationships are between customers and suppliers, to be able to react quickly to volatile market requirements in a concerted manner and at any time. One consequence in the drop in production caused by the crisis was that supply chains were temporarily exhausted and in some cases, whole factories had to be closed primarily semiconductor factories in Asia. The semiconductor industry is a prime example of the difficulty in dealing with volatile demand. In this industry, one of the challenges is throughput times of several weeks determined by processes. It can take between 6 and 12 months to expand production capacities, which also requires high investment costs. These investments, however, must be preceded by trust in the projected numbers. When faced with a volatile market, as we have experienced in recent years, it is difficult to make investment decisions. Volatility in semiconductor markets has a major impact on logistics chains

190 190 Lo g i sti c s The VDA Logistics Congress 2011 Principal topics included contract logistics, risk management and intermodal traffic The VDA held its tenth Logistics Congress on February 21 and 22, 2011 under the theme of Logistics in motion partnership for flexibility and efficiency. This year the event took place on the Mobile Life Campus in Wolfsburg. Among the speakers were leading representatives of business and politics, including Dr. Karl Friedrich Rausch (Member of the Board for Transportation and Logistics at DB Mobility Logistics AG), Dr. Andreas Scheuer (Parliamentary State Secretary in the Federal Ministry of Transport, Building and Urban Development), Prof. Rolf Schnellecke (mayor of the city of Wolfsburg) and Matthias Wissmann, President of the VDA. Over the two-day meeting, in addition to thought-provoking approaches within the areas of contract logistics, supply chain agility and intermodal traffic, there were discussions of current developments and case studies in the areas of aftermarket, packaging management and RFID (radio frequency identification). In addition, factory tours provided a practical insight into the world of logistics. And at the accompanying trade exhibition and the evening event, which took place at the Phaeno science center in Wolfsburg, there was plenty of opportunity for discussions between decision-makers from automotive production and logistics, logistics service providers and packaging manufacturers.

191 191 The VDA Logistics Award In 2011, as in previous years, the presentation of the VDA Logistics Award was one of the highlights of the evening event at the Logistics Congress. This was the fourth time that the VDA had awarded the prize. The accolade is a recognition of particularly innovative concepts in the automotive supply chain that have already demonstrated their visionary quality and economic benefit in practical implementations. Innovative logistics concept at Knorr- Bremse honored This year, the prize went to Knorr-Bremse Systeme für Nutzfahrzeuge GmbH (Knorr- Bremse Commercial Vehicle Systems) for its integrated logistical concept of Supply Chain Excellence. The Practical Forum on Logistics 2010 The practical forum held by the Logistics Department provides information to VDA member firms. In 2010 it took place in Berlin on July 1, when the department reported on committee work and current topics in the VDA and its partner organizations ITA and Odette International. Interested logisticians had the opportunity to hear presentations on the results and status of current projects and progress reports on the implementation of VDA recommendations and on new processes and strategies in member enterprises and to see inside the new premises of the VDA for the first time. As well as information on the new version 3 of the standardized logistics evaluation tool GMMOG/LE, and a presentation on harmonization of the introduction of the EDIFACT message Global INVOIC, which is based on VDA Recommendation 4938, delegates were given insight into the realms of standardizing the manufacturing execution system, and new opportunities in the area of freight cost optimization and reducing carbon footprint by pooling containers on an intercontinental scale.

192 192 Lo g i sti c s The New Electronic Invoicing Concept The Working Group on Payment Procedures New invoicing system increases international acceptance As a result of the German law to reduce the burden of taxation (called the Steuerbürokratieabbaugesetz), 2009 brought new provisions. This replaces procedures that have, up until now, been mixed structured invoice data plus summary logs on paper so that purely electronic invoicing is now possible. However, the new procedure requires more data to be entered in the invoicing documents than in the data records used previously, in order to meet the provisions of the Value Added Sales Tax Act. During 2010, one focus of the work done by the Working Group on Payment Procedures was thus developing a recommendation for the use of a standardized set of EDIFACT (Electronic Data Interchange for Administration, Commerce and Transport) messages for payment procedures in the automotive industry. On the one hand, procedures for dealing with invoices and credit notes need to be efficient while meeting the requirements of VAT and commercial regulations; on the other hand, additional business procedures that were previously handled only through paper records need to be incorporated into the system. The Best Practice Recommendation VDA 4938 Part 2/Global INVOIC, which the working group published in 2010, now makes it possible to meet these stipulations, while also reducing the abundance of national and international formats and standards and gaining wider international acceptance for this payment procedure. Strategic Working Group on Logistics / Logistics Steering Committee / projects In view of the current situation in the logistics sector (the need to manage the unexpectedly rapid upturn after the economic crisis) in 2010 the VDA Strategic Working Group on Logistics and the VDA Logistics Steering Committee, as the decisionmaking and steering bodies of the VDA Logistics Department, oriented the work of the individual committees towards the current challenges. Thus the focus was on the following topics: Strategic Working Group: Long supply chains. This project group, which is part of the steering committee, is working on the following points: Analyzing supply chains Reviewing the flow of goods Volumes and transport routes Consolidation and deconsolidation Capacity management and increasing flexibility The committee considers that the objectives of this project have the potential to create synergies for suppliers not just from a monetary point of view but through the advantages of improved organizational procedures, inter-company consolidation and, in particular, a smoothing out of disparities in the flow of goods (identifying imbalances in traffic and in container routes).

193 193 Logistics Steering Committee: Discussions between representatives of the automotive industry and semiconductor manufacturers During 2010 there were global problems in sourcing semiconductor products, caused primarily by supply bottlenecks on the Asian market, China in particular. Business with China was in itself a source of great instability because of the sharp increase in demand that it entailed. A major cause of these supply bottlenecks is the marked variation in utilization planning between the different sectors. Generally speaking, the automotive industry works on the assumption of production over five or six working days per week in three shifts, whereas the chip industry operates seven days a week. This results in very small capacity buffers in the chip industry, which cannot respond flexibly to brief periods of increased demand. An additional factor is that building up capacity entails long lead times and requires investment. Chip manufacturers also have problems with transparency and interpreting projection data in that release orders from manufacturers to suppliers are of only limited use to chip manufacturers when making forecasts. However, the conversations, discussions and consultations between those involved proved to be a good basis for making decisions on investment. Information has become more available and transparency has improved. The steering committee asked the Logistics Department to organize meetings between representatives of the automotive industry and those of the semiconductor industry. These were on the topic of working with the semiconductor industry, with the aim of improving communications and creating a platform focused on purchasing, logistics and engineering within the VDA. The department was also asked to draw up recommendations on commerce. These activities are continuing in Discussions between representatives of the automotive industry and air freight service providers The year 2010 was characterized by fluctuations in costs and capacity in the air freight sector, and the companies represented on the Logistics Steering Committee reported very different experiences. For most manufacturers, air freight is part of the standard delivery concept, although it makes up only a very small part of the total volumes transported, at less than five percent. Examples of parts sent by air freight are electronics components, CKD articles, leather and catalytic converters. Supply chains operated using air freight are highly susceptible to events such as the ash cloud, strike or sudden economic upturn. For this reason, and to improve cooperation between the automotive industry and air freight service providers, as a first step a meeting was organized between the Logistics Steering Committee and Lufthansa Cargo to exchange experiences with those involved in the supply chain and hence to create more intensive communication between the two sides through the VDA. The topics covered were: Supply chain organization Capacity and flexibility management in the process chain Incorporating logistics service providers in standardization of the processes Standardization of forms of delivery

194 194 Lo g i sti c s The KIT Working Group The Working Group on Information and Communication Technology (KIT in German) is run within the Logistics Department of the VDA. As part of the KIT Working Group s activities, the CMI project Collaborative Managed Inventory was completed in a joint operation with the After-market Working Group. This brings VDA Recommendation 9001 to fruition. On April 22, 2010, the AK Working Group held a practical seminar in Berlin on OFTP2 (Open File Transfer Protocol 2), which met with very positive feedback. At the suggestion of the KIT Working Group, the Odette forum published an OFTP2 Directory to indicate to those interested which partners work with OFTP2. Register online at: The Logistics Department has prepared two data catalogs, one on the topic of RFID (radio frequency identification) and one on EDI (order processing by Electronic Data Interchange); they are currently testing how this can be transferred to the relevant EDIFACT message, DESADV. A request has been made to modify the global DESADV message in order to identify JIS frequencies. It is not practical to adapt it to meet VDA Recommendation 4913, and the KIT Working Group has declined to make any modification of this kind. The European Import Control System (ICS) is a joint project group that has been set up with representatives of DSLV (the Association of German Freight Forwarders and Logistics Operators). Its objective is to standardize procedures for communicating information between shippers and service providers. UNICODE: the discussions on the use of UNICODE, which began as long ago as 2009, were continued within a working group. The KIT Working Group recommends representing EDIFACT messages in XML. However, further consultation is still required. The KIT Working Group has identified the following areas for future projects: IFTMIN (International Forwarding and Transport Message: Instruction) a unified implementation guide for or in the automotive industry Package Management: the possibility of incorporating CONTRL (Syntax and Service Report) and APERAK (Application Error and Acknowledgment) messages in this procedure File attachments for electronic invoices: a unified procedure for sending file attachments in EDIFACT Order acknowledgment for release orders (where appropriate with EDIFICE) Various adaptations, clarifications and additions to existing recommendations were agreed or are still in discussion. These relate, for example, to VDA Recommendation 4922 (Freight Order), and VDA 4902 (Shipping Labels / acceptability of data matrix code).

195 195 The E-12 Automotive Working Group The E-12 Automotive Working Group focuses on improving communication between manufacturers and suppliers to the automotive industry, by way of Internet portals. A hot topic in 2010 was the development of rules for the use of agents. Here, agents are software tools that automate repetitive manual processes of data input or retrieval by simulating the inputs of a real user. Before such automation can be used, it must find answers to various technical and legal questions, for which a unified framework must be created a framework that will have to be accepted by both sides, portal owners and portal users. A recommendation on this is close to completion. Objective: smooth-running cooperation between manufacturers and suppliers The topic of a common, industry-wide database for supplier master data was again discussed. The management of supplier master data, including mapping of the organizational structure of such companies, is an ongoing task for both manufacturers and suppliers. The E-12 Automotive Working Group began by defining the demands made of such a database and, together with representatives of the ITA (an association of IT companies who are partners to the automotive industry), it has set up a prototype. During 2011, this prototype will be used in a field trial to test the feasibility, functionality and acceptance of a system of this kind. If test results are positive, a corresponding service will be set up permanently, in order to bring about significant improvements in the partner data and to reduce the burden of managing it.

196 196 Lo g i sti c s CoC packaging Within the permanent working groups on small load carriers (VDA-KLT in German), wheel pallets (EWPS European Wheel Pallet System) and original parts packaging, the Packaging Center of Competence (CoC) deals with the current problems and requirements of the automotive industry regarding these aspects of packaging. The constant updating of the KLT, GLT and EWPS products developed and certified by the VDA requires close collaboration between the automotive industry, logistics service providers and packaging manufacturers. Alongside the working groups of the Packaging CoC, special project groups have continued to work on large load carriers made of plastic and the standardization of disposable packaging in seaborne container applications. Small load carriers More than 75 million containers have been put into circulation, over a period of about 20 years In 1989, the publication of the first version of VDA Recommendation 4500 on a VDA Small Load Carrier (KLT) System marked the beginning of a success story for this standardized container system. Together with the electrostatically dissipative containers, which have been standardized since 2005 by VDA Recommendation 4504, so far more than 75 million VDA KLTs have been produced and brought into service. Highlights of 2010 included the drafting, finalizing and publishing of what is now the seventh version of VDA Recommendation Additions include the establishment of the color test spectrum and associated measurement methods, the regulation of UV stabilization, the general conditions for washing and drying processes, a quality test for the lid of the loading unit, and a precise definition and presentation of the tests for permissible levels of flexing. In addition, a catalog of possible damage has been drawn up and is now published on the VDA website. All the drawings in the series have been revised for tolerances and the illustrations have been standardized; these are also available on the VDA site. The main tasks for 2011 are optimizing the loading unit lids, solving the problems of residual adhesive during washing and a possible revision of VDA Recommendation Large load carrier made of plastic The development of a VDA-recommended standard for large load carrier systems (GLTs) made of plastic for the automotive industry was concluded, with dimensions 1,200 x 1,000 mm, as documented in VDA Recommendation These GLTs have uniform interfaces, enabling them to be used across manufacturers and suppliers so that a pool of standard load carriers can be established. An additional GLT standard size (800 x 600 x 700 mm) was added to the recommendation in Their use in practice has commenced, and a 12-month field trial using this plastic GLT has already been carried out, with a positive outcome.

197 197 VDA Project Group on disposable packaging for seaborne containers The objective of this VDA Project Group was the standardization of disposable packaging (its dimensions, design and quality) relative to the dimensions of seaborne containers and their applications, so that they would be suitable for universal use. The results of this project, which is now complete, are presented in VDA Recommendation This recommendation is currently being discussed with international associations (Odette and AIAG) with the aim of bringing at least its basic elements into international use. PLM Working Group taking cues from users and driving projects forward The VDA Working Group on Product Life Cycle Management (PLM AK) in 2010 once again proved the effectiveness of its network of manufacturers and suppliers to the automotive industry. This is demonstrated in the commitment of those involved, and the tried-and-tested working method used in creating recommendations and turning them into practical procedures, data formats and system concepts for the entire cooperation network. Collaborative work with the ProSTEP ivip association to combine areas of expertise has been intensified yet further. In 2010, the VDA PLM Working Group further promoted topics that had previously been identified, as well as setting out new ones. The subjects that the members of the working group have closest to their hearts were presented, discussed, consolidated and prioritized over the course of several meetings. This led to a list of topics that are to be jointly pursued in 2011: Reducing the complexity of the IT landscape Working together globally, taking into account local conditions Continuous process support Systems engineering In addition, the working group achieved the following in 2010: Change management High product quality with fast throughput times is the aim of every enterprise. For this, the required changes have to be communicated within the company and implemented under a managed change process (ECM Engineering Change Management). The VDA and ProSTEP ivip promoted the relevant project under the umbrella of the Strategic Automotive Product Data Standards Industry Group (SASIG), an amalgamation of AIAG (USA), GALIA (France), JAMA (Japan), Odette (Sweden) and the VDA. The work was completed in 2010, and the results will be published in the form of VDA/ProSTEP ivip Recommendation Vehicle electrics The objective of this project group is to improve vehicle circuit development and to integrate it into the vehicle development process as a whole. The specification for the Vehicle Electric Container (VEC), which covers all aspects of vehicle circuit development, was completed at the end of 2010, when, together with the ECAD Implementor Forum (a project group of the ProSTEP ivip Association), the group presented the results to VEC users and software manufacturers, who confirmed the high demand for these solutions in industry. Publication of the VEC specification is planned for April 2011.

198 198 Lo g i sti c s JT (Jupiter Tessellation) Our industry needs solutions that will enable it to use product data across the board independently of costly CAx licenses, and with small data volumes and a high level of functionality. In this context, calls for the lightweight 3D visualization format JT (Jupiter Tessellation), used for visualization and in downstream processes, have become increasingly compelling. To provide solutions quickly, the PLM Working Group and ProSTEP ivip had already launched three joint activities in 2009: JT Workflow Forum (JT WF), JT Implementor Forum (JT IF) and JT Translator Benchmark (JT BM). JT WF worked on 20 use cases, and validated them on the premises of the companies involved. These cases cover the entire range from visualization to DMU (digital mock up) and supplier integration, simulation and digital factory, right through to long term archiving. These were used to determine the technical requirements of the future ISO standard for JT. JT IF is used by leading CAD and translator vendors as a platform to ensure the interoperability of their products. The first round of tests was complete by the end of JT BM is the means of testing the data transfer quality of JT translators on a neutral basis; the second benchmark has already been carried out during Both these activities, JT IF and JT BM, have brought about a significant improvement in the software quality of commercially available translators. In addition, ProSTEP ivip has proposed the standardization of the latest JT specification (9.5) to ISO. It is partly thanks to support from the PLM Working Group that ISO accepted this proposal at the end of The PLM Working Group will continue to actively support the standardization of JT under ISO. The plan is to conclude the standardization work by the end of STEP AP 242 In its role as a partner in an international consortium, the PLM Working Group has agreed that the two STEP application protocols AP 203 and AP 214 should be combined under STEP AP 242. The objective is to develop a common application protocol for the automotive and aerospace industries. Bundling the activities will make it possible to respond more quickly to new industrial requirements. In addition, AP 242 will open up ways of integrating technologies such as UML (Unified Modeling Language) and XML (Extensible Markup Language) and lowering the costs of maintaining the standard. With AP 242, STEP (ISO 10303) will become the backbone for data exchange, data sharing, visualization and long-term archiving. The two standardization projects JT and STEP AP 242 have not only been timed to coincide, but their results also complement each other. The JT ISO standard provides a neutral format for use in visualization and downstream processes. Metadata and structural, process, kinematic and other data can be mapped using STEP AP 242 XML. STEP is already the most important standard today for the neutral definition of product data. Its use in the additional environment of visualization will make it even more significant in future.

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201 The Law, Sales and After-sales Radoljub Kämmer printer, production operator (quick-connector assembly), Cooper-Standard Automotive, Grünberg

202 202 Th e L aw, Sa le s a n d A fte r-sa le s Current Developments in Car Distribution Selective distribution The targeted selection of independent dealers ensures proximity to customers and competition Dr. Dieter Löchelt, General Counsel, BMW AG (Chairman of the Legal Affairs Committee) The Legal Affairs Committee deals with current issues in corporate law, as well as legal relationships along the automotive value chain. The Legal Affairs Committee also acts a forum for policy developments, such as EU civil law. Selective distribution is still the preferred new car retail business model of the automotive industry in Germany and across the EU. With a selected number of independent car dealerships, the individual brands in the EU try to achieve the best possible area coverage and thus the greatest customer proximity. At the same time, the selective distribution system has proven to be profitable and to promote competition. In the crisis years 2008/09, the EU Commission drew up the new Motor Vehicle Block Exemption Regulation (MVBER) and the new vertical BER, thus creating a reliable legal basis for the industry and retailers. Planning and investment security are a decisive factor for the survival of medium-sized retail operations in the face of competition. As the new framework conditions for new car sales and the vertical BER will not enter into force until 2013, businesses and industry have sufficient time to make the necessary changes on the basis of the 2002 MVBER, which will continue to apply. With regard to the new framework conditions for cartel legislation relating to car sales, i.e., the new MVBER 461/2010 together with its explanations and the new vertical BER 2010 from the EU Commission, the VDA is certain of its positive approach to continuing selective distribution. The VDA was quick to support the commission s assessment that there is no longer any need for the application of a sector-specific BER to car distribution. The MVBER will, quite correctly, be replaced by the vertical BER in The less detailed and more flexible regulations of the vertical BER will enable manufacturers and dealers to reduce costs and increase the efficiency and profitability of the distribution network. In view of the high intensity of competition in the motor industry, production and distribution costs are under immense pressure to change. The vertical BER makes it easier for automotive industry partners to adapt to the altered conditions. There does not have to be one single way to structure vertical distribution relationships. Vertical BER and partnership with dealerships The new vertical BER will form the basis for the partner relationships between manufacturers and the motor trade from After this, the manufacturer will control essential distribution functions in its brand networks, while still being able to rely on the independent services of the dealerships. The principle of a value-added community that goes beyond individual companies not only applies to automotive distribution, but also has a significant effect on cooperation between manufacturers and dealers. The regulations contained in the Code of Good Practice for dealer contracts approved by the European associations ACEA and JAMA also ensured that minimum notice periods and alternative severance procedures were adopted in the dealer contracts.

203 203 With the last few crisis years, the competition for new car business has further intensified, such that it need not fear comparison with other consumer product markets in the EU. The findings of the EU Commission in their 2008 analysis report still apply, according to which new car prices are falling, price differences are decreasing and the market concentration among vehicle manufacturers is tending to drop. Furthermore, the new car market in the EU has shown itself to be volatile and fragmented; it has also been strengthened by the power of consumer demand. It should be expected that new foreign competitors will become active in the EU. The new car market is strongly contested throughout Europe With the introduction of the vertical BER, vehicle manufacturers can once again conclude fixed-term agreements with brand-exclusive dealers. Multi-brand dealerships, only a few of which were identified by the EU Commission, represent a business model that is clearly not encouraged by the market. Neither new market entrants nor consumers have shown any particular interest in multi-brand dealerships. Above all, the considerable increase in information opportunities through the Internet allows consumers to compare brands and provides access to the individual marketing campaigns of manufacturers and importers, without having to set foot inside a car dealership. Multi-brand dealerships can, however, still be economically meaningful in sparsely populated areas, where low sales volumes would not support a brandexclusive business. Investments in dealerships and workshops The approval of the new MVBER and the new vertical BER have given industry and dealers sufficient planning security for their brand networks to enable them to implement forthcoming technical investments as well as building works. The investment backlog from the crisis years is now starting to clear. It is extremely unlikely that the central function of the dealership could be replaced by Internet processes. The customer s acceptance of the consultation and agreement of the purchase agreement, the provision of financial services (credit or leasing and insurance) and the associated garage services is unchanged and is also expected of the car dealership. The conflict in the market is therefore characterized not only by price competition, but also competition in services from brands and dealerships. The classic dealership is not threatened by the Internet

204 204 Th e L aw, Sa le s a n d A fte r-sa le s Sustained Development of Vehicle Servicing Servicing market situation The trends in the servicing business in 2010 were positive, despite the marks the crisis has left on the industry. In addition to the number of workshop hours sold, it is necessary to take into account turnover from items such as original parts and accessories, wheels and tires, consumables and lubricants as well as classic items when producing an economic assessment of customer services. In general, the car after-sales sector has seen a positive development, including in accessories sales. However, workshop throughput levels have remained largely unchanged. Dealer profitability has also further increased, especially for brand dealers. Prospects for the servicing business in 2011 are stable to slightly improving. Technical advances lead to longer service intervals Technical advances are making vehicles ever more complicated, but also ever more reliable and durable, so that their lifetime is continuously lengthening. Vehicle manufacturers have therefore often extended the service intervals. Furthermore, the frequency of repairs has also fallen. Environmental technologies such as catalytic converters and filters have proven their durability well. It can therefore be assumed that the number of workshop visits will fall further. Nevertheless, vehicles will need more frequent repairs as they get older, meaning that more repair orders may be received. The servicing offered by the car manufacturer s distribution network has always been part of the brand and its value. Thanks to new technical developments, the introduction of new drive systems, increasingly light construction with new bodywork and chassis designs and the increasing number of electronic components, a course is being set in the automotive value added process, which takes into account the needs of the workshops. They need large spare parts warehouses and a sophisticated parts logistics system, a wide range of technical equipment and comprehensively trained staff. Customer orientation of servicing Service quality must be ensured for the long term and continuously improved. These are tasks for both the vehicle manufacturer and the workshop business, albeit using perpetually renewed marketing tools. As soon as a vehicle arrives at the workshop, the extent of the work must be identified, right through to drawing up the invoice. Furthermore, it is also important to determine the customer s needs and offer periodic and ad hoc maintenance and repairs. Customer and dealer satisfaction can also be assessed and used to further develop servicing measures and processes. Manufacturers check the quality of workshops for improvement measures Critical workshop test results could harm the image of a brand as well as the dealer s business. It is important here that the tests initiated by the industry press are carried out according to uniform criteria that correspond to common practice. The vehicle manufacturers themselves regularly test the quality of their businesses according to uniform criteria; these tests can then be used for improvement measures. Strong brand products and good service therefore form a unit that can be maintained and built upon by the brand and workshop businesses as a value added unit. Customer services remain essential in the used-car sector, especially with regard to round-the-clock nationwide availability. The strategies employed by used-vehicle manufacturers include extended guarantees, full service leasing, servicing packages and telematics services alongside 24-hour service. The aim is to secure customer loyalty for the entire lifetime of the vehicle, which must remain functional as an investment in transportation.

205 205 Electric vehicles in customer services Preparations have begun for servicing electric vehicles. Hybrid vehicles can already be serviced and repaired. The new vehicle mechatronics qualification introduced in 2003 has changed the path of professional qualifications. The industry and the motor trade also train vehicle dealership staff on how to handle high-voltage systems safely. The same also applies for hybrid vehicles, which use more challenging technologies than purely battery driven cars. Irrespective of this, the industry and the motor trade will continue to adapt professional qualifications to accommodate future technical developments.

206 206 Th e L aw, Sa le s a n d A fte r-sa le s Status Quo of EU Consumer Law is Guaranteed The VDA calls for the retention of equitable regulations between producers and consumers The EU has adopted a number of Directives on consumer law in recent years, such as those on the sale of consumer goods, distance selling (doorstep, telephone and Internet contracts) and general terms and conditions (T&Cs). In the process, regulations on the consumer s right to withdraw from the purchase agreement and on guarantees/ warranties have been created. The EU has now been working towards further harmonization of the aforementioned legal areas since 2008, in order to create a single legal basis for consumers in the internal market. Harmonization of EU consumer law From the point of view of the automotive industry, further standardization of EU consumer law might be sensible if it does not form part of full harmonization, but instead serves to provide a standard definition of the terms used in the individual directives. The EU Commission, Council of Ministers and European Parliament have been discussing a number of different suggestions for the expansion of consumer law for some time. For the automotive industry (vehicle manufacturers and suppliers), certain suggestions were unacceptable since they proposed a right for the consumer to return a vehicle within 15 days of handover, an extension of the burden of proof of freedom from defects from 6 to 12 months, an extension of the warranty period from 2 years to 10 years and the introduction of a general priority for the return of the product over the alternative of repairing it. It is important to consider here that the car added value and retail chain in Germany alone is characterized by small and medium-sized companies. An uneven extension of consumer rights would mean an equal increase in the burden to be borne by medium-sized-supplier industries. The VDA has therefore spoken out in favor of retaining the balanced regulations of the existing EU consumer law. EU consumer law with balanced regulations The EU Council of Ministers resolved in January 2011 to limit the harmonization mandate for EU consumer law to distance selling only, and thus to exclude the proposed areas of guarantees/warranties and T&Cs. Since the EU Commission also backs this position, the automotive industry is now waiting for the European Parliament to push on with the harmonization of EU consumer law within the specified focus. This would guarantee that balanced EU regulations could continue to form the basis of the motor trade between sellers and buyers in Europe.

207 207 European Contract Law a New Approach The efforts of the EU to develop standardized contract law for the EU date back more than 10 years. As part of the EU Commission s 2020 strategy, the perceived bottlenecks in the internal market will be taken as a trigger to speed the economic upturn with measures intended to strengthen the internal market. These also include the new approach to European contract law. The EU is seeking European contract legislation to strengthen the internal market The EU Commission is of the opinion that the 27 different legal systems of the individual member states prevent companies, especially SMEs, from trading internationally. Consequently it published a green paper on European contract law in July 2010 and held a public consultation. The green paper itself does not contain any material law, but shows individual ways to develop and introduce a European contract law. The options shown concern matters including the question of the extent to which it is legally binding, and range from not binding at all to binding legislation through an EU regulation. The EU Commission favors an optional contract law instrument that should be available in the member states as an alternative alongside the relevant national contract legislation in the form of an opt in possibility. Alongside the green paper, the EU commission has also appointed a group of experts to produce a common reference framework for European contract law. This group consists of civil law experts from the member states and is developing a reference framework independent of the question of whether and in what form this should be introduced into the EU. According to the original timescale, this reference framework should be completed during However, the VDA, like the BDI, has fundamental objections to a European contract law. There are doubts that the cause of any hindrance to international trade lies in the lack of standardized contract law. Instead, mainly language and cultural reasons are likely to be the decisive factors. There are also doubts concerning the legislative competence of the EU in the absence of a corresponding legal basis. VDA warns against leveraging the civil code and legal uncertainty The VDA also feels that there would be a risk to the automotive industry if European contract legislation were to change the proven, balanced legislation of the German Civil Code (BGB) for the worse, leading to greater legal uncertainty for the foreseeable future. In turn, this would have a negative effect on the automotive value added chain. In the end, the options for the introduction of a European contract law detailed in the green paper cannot be taken seriously until the content and legal connotations of the European contract law are known. Furthermore, a European contract law would also run out of steam if there were no harmonized court regulations and case law to back it up. Lastly, the difficult and prolonged discussions surrounding the EU Consumer Protection Directive also show the strong resistance likely to be encountered if the European contract law project is continued in the EU.

208 208 Th e L aw, Sa le s a n d A fte r-sa le s EU Design Protection for Innovations and Jobs The automotive industry is well aware of the extraordinary role played by patents, utility models, trademarks and designs (design) in research and development activities. Intellectual property rights are essential for the marketing of vehicles, spare parts and accessories in the EU as well as in the export markets. The decisive factor is therefore that patents and design rights may not be unilaterally restricted and that we must continue to fight product piracy energetically in emerging markets. Abolishing design protection would send the wrong signal Suggestions from European institutions or individual EU member states to abolish design protection for visible spare parts in the EU would therefore send the wrong signal. This careless use of intellectual property rights the next EU Directive could affect patents would provide unimpeded market access to large-scale industrial manufacturing of car parts in the Far East and thus to product piracy. The reduction of intellectual property rights would endanger the automotive value added chain, harm the competitiveness of innovative companies and endanger the associated jobs. Regular reference is made to an alleged monopoly held by the owners of design rights for car parts, which would therefore have to be exempt from protection. It should also be established that intellectual property rights result in an exclusion effect in favor of the rights holders against third parties. A patent must not be infringed by any third party. Protected rights should also apply to a certain extent to the spare parts business. Limitations on design rights only cannot be justified. As other protected rights such as patents and utility models can apply to spare parts (such as an adjuster mechanism for the exterior mirrors, or a sensor in a body panel), a general waiver on protected rights in the after-sales sector should be demanded. Such a severe encroachment on the EU-protected rights system is, however, unlikely and would also be unacceptable. No correlation can be established between design protection and spare parts prices High-quality spare parts also offer automotive industry customers the best guarantee when it comes to repairs to their vehicles. The insurance industry has established that repairs with pattern parts are often more expensive due to subsequent remedial work required as a result of their poor fit. The supposed reduction in repair and parts costs associated with the abolition of design protection is therefore unjustified. It is to be ascertained in the EU that the costs of parts, repairs and insurance premiums are to no extent lower in locations where there is no design protection for parts. Germany lies slightly below average in terms of price in the EU, according to a price comparison produced by Deutsche Automobiltreuhand GmbH (DAT). The DAT comparison was able to prove that there is no direct correlation between design protection and the price of spare parts.

209 209 Analyses by the EU Commission in 2007 showed that design protection for spare parts would increase corresponding prices by 5 to 10 percent in all member states. However, these calculations were based on only a relatively small set of prices and were also several years old. In contrast, new analyses have shown scarcely any difference in price structure between countries with and without design protection. The current DAT investigation summarized the manufacturer s discretionary recommended prices for several thousand parts, covering around 90 percent of the market. The results did not reveal any system: car drivers in Germany, a design protection country, almost always pay less for a spare part than drivers in other countries. The fact that Switzerland has the highest prices is less likely to be due to its design protection laws, and more to the generally higher prices found there, as well as exchange rates especially since, if we consider the prices for non-protected spare parts (i.e., parts that are not directly visible on the car), drivers there still have to pay more than those elsewhere. To continue its global competition for innovation, safety, environmental friendliness and attractive design, the automotive industry also needs unlimited design protection for car parts. The VDA has therefore asked the federal government, as well as the EU Commission and the European Parliament, to expand the industry s intellectual property rights in order to improve its competitive edge: patents, trademarks and design rights are essential for the automotive industry s innovations design protection for spare parts must be retained in order to secure research potential and jobs in Germany effective protection rights are necessary for the fight against product piracy in the EU and third-party markets

210 210 Th e L aw, Sa le s a n d A fte r-sa le s Ancillary Copyright for Press Publishers The VDA rejects publishers claims for performance rights Up to now, press products have largely been available free of charge on the Internet. This could change if the demands of the press publishers for ancillary copyright are implemented by the legislators. The VDA views this critically and joined with other industry associations to issue a joint statement in September 2010 against the introduction of ancillary copyright for publishers. This states the following: We regard a varied press and media landscape as an essential benefit, even in this digital age. Ancillary copyright for online press publishers is not, however, in any way suitable for taking digital challenges into account. Ancillary copyright is a legally governed protected right, which is related to copyright. On the one hand, ancillary copyright for press publishers would have the result that even the most banal information and components of that information would be protected for press publishers, unlike the previous situation. On the other, a lump sum fee for the use of freely accessible press products would be introduced to the Internet in a commercial environment. The basis for the lump sum license fee, which would be levied by a collection company founded for that purpose, would be the corresponding license agreements to be concluded. These demands, especially the payment of a lump sum, are set down in writing by the press publishers in a key points paper from The Federation of German Newspaper Publishers (BDZV) and the association of German magazine publishers ( Verband Deutscher Zeitschriftenverleger, VDZ). The introduction of ancillary copyright would lead to an additional economic burden The VDA s fundamental reasons for rejecting an ancillary copyright for press publishers include the considerable negative economic consequences for the automotive industry and the economy in general. The demands of the press publishers would mean in practice that the company would have to pay a lump sum fee to a collection company for every Internet-capable terminal. Based on legal and political considerations, too, the VDA is against the introduction of ancillary copyright for press publishers. Press publishers enjoy sufficient security with the existing protection provided by copyright. Copyright comprehensively governs the legal relationship between the author, publisher and user/reader. This also applies to the digital age. Press publishers are free to choose whether to offer their content free of charge on the Internet, even without ancillary copyright. The introduction of performance rights would represent an unjustified change to the copyright system, since otherwise the publishers provide all holders of performance rights with something that is not identical to the works protected by the underlying copyright. In the event of any failures in the enforceability of their existing rights, press publishers also have fairer instruments with less severe consequences at their disposal.

211 211 Automotive Manufacturer Banks Continue Expansion Trend The automotive manufacturer banks ( captives ) play a vital role in marketing passenger cars and industrial vehicles to both commercial and private customers. Automotive financial services are closely interwoven with current market events, but are also influenced to some extent by other framework conditions, such as the capital markets interest rate and certain financial products. The last two years were not easy for the automotive banks, but in the end they were able to succeed. Over the course of 2009 they acted as a stabilizing factor and in 2010, they were able to start expanding their market share in the financial sector. The automotive banks are indispensible to both the passenger car and industrial vehicle industry In a difficult market environment in Germany, the manufacturers automotive banks expanded their market share in 2010 to 68 percent of all financed or leased new vehicles (2009: 63 percent) thereby underscoring that they are the market leaders. Last year, following the big boom ushered in by the environmental incentive, the German automotive market lost about a quarter of the long-term average for new registrations. The manufacturer banks, on the other hand, ended the year in a significantly more stable position with 1.7 million financing and lease contracts (-12 percent). The automotive banks contract volume in 2010 was around 83.8 billion euros (-6 percent). Market developments in 2010 Business with commercial customers clearly reflects the economic recovery: the automotive banks acquired 122,000 new commercial financing contracts, an increase of 32 percent. They were also able to achieve an increase of 11 percent in commercial leasing, concluding around 511,000 contracts. Economic recovery led to increased demand for transport capacity; commercial customers took advantage by increasing their investment in modernizing and expanding their vehicle fleets. As expected in the private segment, the market registered significant distortion effects due to the environmental incentive. The result was that in 2010, there were 300,000 fewer new registrations among the automotive banks than in the previous year. At around 488,000 new private registrations in 2010, the automotive banks registered a loss of 38 percent. The best figures achieved in 2009 by the automotive banks in the private customer sector also contrasted with a significant dent in In any case, private customer business has been picking up again in the first months of The automotive banks average financing and leasing totals show that last year customers again exhibited increased demand for premium vehicles. In 2010, the average financing total was 18,672 (+20 percent) while the average leasing total was 24,395 euros basically unchanged. It was mainly the high-volume brands that profited from the environmental incentive, while it barely affected premium manufacturers however in 2010 this trend was reversed. Current numbers show that over the last year, there was demand for significantly higher classes of vehicles.

212 212 Th e L aw, Sa le s a n d A fte r-sa le s Automotive banks mobility packages continue to be attractive A key factor in the automotive banks expansion of their status as market leaders in the passenger car sector is the continuing success of their mobility packages; these offer customers additional service and insurance commitments for their cars (e.g., motor vehicle insurance, extended warranty, service contract). It just goes to show that customers who take out a financing services contract today no longer want a threefifths car, but rather want to deal with the total cost of their vehicle in monthly installments. Last year, customers of automotive manufacturer banks concluded around 1.9 million additional service contracts. The continuing trend toward mobility packages is a key growth factor for automotive banks. Currently, each financial services contract for new vehicles garners 1.6 additional service contracts and of course the automotive banks want to continue to expand their range of services in the future. Development of the automotive banks financial market Overall, the automotive banks refinancing and risk situation has improved. This is reflected in both an improved interest rate and in moderately falling risk costs. Captives positioned on the threshold between the automotive and financial markets profit from their focused and stable business model, which is rewarded by both customers and the capital markets. It is also a welcome development that the automotive banks asset-backed securities (ABS) transactions have a good rating and the credit default rate continues to remain moderate. Outlook: Optimism for the rest of 2011 In 2010, the manufacturer banks underscored their ability to react flexibly and successfully using their original business model, even in difficult market situations. They now confidently look forward to the rest of Residual value of vehicles will continue to stabilize. As far as being the market leaders, the manufacturing banks believe they can still exceed their current record values for market share over the long term. The mobility services offered in addition to the vehicle will continue to drive this positive development in the future. This can exert a beneficial effect on the whole automotive value-creation chain. Against this background, the automotive banks will continue to play an important stabilizing and catalyzing function in the German automotive industry for the remainder of the year. Dirk Wegener, Director of Corporate Insurance Daimler AG (Chairman of the Insurance Committee ) The Insurance Committee deals with issues related to industrial and vehicle insurance, as well as insurance risk along the automotive value-creation chain. The committee has the opportunity to discuss current issues related to insurability of international product liability risks or EU law on insurance brokers.

213 213 Current Developments in Public Procurement The importance of public procurement to the automotive industry must not be underestimated, not only due to the high volume of public purchases, including cars, but also because public procurement provides the public authorities with a tool for tracking general political targets, such as environmental and socio-political targets, through the economy. During the reform of the procurement law, one of the central demands of German industry was that the reform should be carried out within the existing system, especially the cascade system. The cascade system describes the classic threestage procurement law system the act against restraints on competition (GWB), procurement act and regulations on construction contracts. In the past, this proven system was breached by individual legal acts, including the restructuring of the sector ordinance within the framework of the 2009 reform of procurement law and the implementation of the directive on clean and efficient vehicles. There is a justified fear that as a result of further individual interruptions as part of the implementation of European regulations, such as the Defense Directive and the Clean and Efficient Vehicles Directive, the proven system would be effectively swept out the back door. The VDA is therefore in favor of retaining the procurement law in the existing cascade system. The contract procedures are to be reworked by specialist procurement committees consisting of specialists from the client and contractor side. The involvement of the groups affected by procurement law ensures that practical and non-bureaucratic regulations will be developed for the procurement process and that this will maintain the excellent acceptance of the procurement law. The VDA was concerned to find that aspects outside the scope of procurement, primarily social aspects, are increasingly being demanded within the procurement process. As part of the 2009 reform of procurement law, public authorities were given the opportunity to impose social or environmental requirements on contractors for the first time. Taking these non-procurement aspects into account threatens the priority of economy and harms competition, since it inevitably limits the number of highperformance bidders. The procurement process itself becomes less transparent and thus more vulnerable to corruption. The bureaucratic and financial costs associated with the process increase for both parties. Furthermore, the company can only provide evidence of these aspects at disproportionately great expense. On January 27, 2011, the EU Commission published a green paper on public procurement reform in the EU and began a consultation on these issues. The stated aim is to make European procurement law more flexible and to bring it into greater harmony with the political, economic and social challenges and aims of the EU. The focus of the consultation is on improving access for smaller companies to the procurement markets, reducing bureaucracy and supporting international procurement in Europe. Another key point of the green paper is to take non-procurement aspects into account in the procurement process. Within the EU Commission, this falls under the heading of strategic use of the public procurement process. The VDA regards this development as critical, especially on a national level after the coalition agreement specified the review and possible correction of the non-procurement aspects governed by the GWB within the framework of the 2009 German procurement law reform. Compliance with the three-stage cascade system The VDA is following the increasing inclusion of aspects outside the scope of procurement with concern Hans Voigt, Director of Compensation Management ZF Friedrichshafen AG (Chairman of the Public Procurement Committee) The Public Procurement Committee is the ideal platform to discuss questions related to purchasing of passenger cars, industrial vehicles and special-use vehicles by the public sector. Our focus is on the legal framework conditions and contract-awarding practices among procurement divisions at the federal and state levels.

214 214 Th e L aw, Sa le s a n d A fte r-sa le s The implementation of the Clean and Efficient Vehicles Directive into German law is coming The Clean and Efficient Vehicles Directive governs the identification of minimum requirements for energy and environmental effects in the public procurement process (energy consumption, CO 2 emissions, pollutant emissions). Up to now, the German Federal Ministry of Economic Affairs has only published a draft bill, although the deadline for the implementation of the EU Directive expired back on December 4, The VDA issued a statement on the draft bill in August 2010, expressing its support for the EU s aim to invigorate the market for clean and efficient vehicles and to improve the transport sector s contribution towards environmental, climate and energy policy. At the same time, the VDA demanded implementation in the proven three-stage system. In terms of content, the VDA objected to the fact that the exceptional ruling specified in the Directive in accordance with Art. 2 of the Directive was not used in the draft bill. According to the Directive, vehicles not subject to type approval or single vehicle approval, primarily vehicles for the armed forces of for disaster prevention, fire service, police, building site, ports and airports, may be exempt from the regulations.

215 215 Automotive After-sales The automotive aftermarket also includes the vehicle diagnosis and technical information sectors alongside the servicing and spare parts business within the automotive industry. In 2010, the aftermarket for VDA member companies underwent very dynamic development. Most businesses have left the financial crisis of 2008 to 2009 behind them and are moving forward strongly. The market for automotive spare parts with dynamic trends after the financial crisis According to ZDK, the number of car businesses in 2010 remained more or less constant in comparison with 2009 at around 38,050. This number includes 18,100 brand businesses and 19,950 unaffiliated businesses. According to the 2011 DAT Report, the increase in annual distances travelled to 14,800 km in 2010 (14,260 km in 2009) has had a positive effect on aftermarket and servicing turnover. Furthermore, maintenance activities have also been influenced by the growing service intervals and increasing numbers of electronic parts in cars. According to DAT information, 2010 saw a slight increase in average vehicle age within the annual deadline from 8.1 to 8.3 years, thus returning to 2008 levels. The frequency of maintenance and damage generally increases with rising vehicle age; as a result, rising vehicle age has a strengthening effect on the repair and servicing market. Maintenance frequency rose slightly in In total, turnover from servicing activities rose by around 3 percent to approximately 29 billion euros, according to ZDK. The dominant themes of the year were the changing market structure and the effects of the new legal framework conditions. Further tasks included the management of the increasing diversity of parts, from both capacity and logistics viewpoints. The VDA Aftermarket Committee, which consists of equal numbers of representatives of vehicle manufacturers and suppliers, has taken on these challenges and has established joint working groups to develop solutions and VDA recommendations for these issues. An important topic for the Aftermarket Committee was the revision of the motor vehicle block exemption regulation (MVBER) 1400/2002. Since June 1, 2010, specific regulations have applied for the aftermarket. The working groups set up by the aftermarket committee have enabled the VDA to submit a number of joint statements from Manufacturer Group I and Manufacturer Group III to the German Federal Ministry of Economic Affairs, which were to support the unification process on a European level according to the version that has been in force since June 1, This version is welcomed by the VDA. Within the framework of the committee s work, the 2010 VDA recommendations on important areas for action have been drawn up and approved. These include: VDA Recommendation 604 OT Component Specifications for the Aftermarket Fred Kappler, Group Director of Original Parts Sales and Service Volkswagen AG (Chairman of the Aftermarket Committee) The Aftermarket Committee gives manufacturers and suppliers opportunities to exchange ideas on the challenges presented by the aftermarket business. VDA Recommendation 9000 Measuring Aftermarket Forecast Accuracy VDA Recommendation 9001 Collaborative Managed Inventory (CMI) and Vendor Managed Inventory (VMI) in the Aftermarket

216 216 Th e L aw, Sa le s a n d A fte r-sa le s A very important topic for the aftermarket sector is the long-term supply of electronic components. The automotive and electronics industries move to different timescales with regard to their delivery obligations, meaning that the opportunities for influence from the automotive industry are very limited due to the relatively low sales volumes in the aftermarket. The aftermarket committee has therefore set up a working group which will work closely with Zentralverband Elektrotechnik- und Elektronikindustrie e.v. (ZVEI - the German electrical and electronic manufacturers association) to develop suggested solutions to improve long-term supplies. The Manufacturer Group III (automotive suppliers) working group represents the interests of aftermarket parts manufacturers within the VDA. This body both commissions projects and serves as a platform for information and communication. It observes changes in the market and legislation, examines the effects on the aftermarket, provides information and discusses common principles. Here too, the focus in 2010 was on the effects of the new regulations of MVBER on the aftermarket and access to maintenance and repair information with regard to the EU Regulations Euro 5 and Euro 6 715/2007 and 692/2008. Information obligations arising from the EU REACH Chemicals Regulation must be fulfilled Alongside this, a working group set up by this group is working on most efficient way possible to fulfill the information obligations arising from the REACH regulation 1907/2006. Using the catalogue system from TecDoc, it is planned to distribute the appropriate information largely automatically throughout the supply chain in the free aftermarket. The launch is planned for the first half of 2011 with the corresponding versions of the TecDoc software. September 2010 saw the launch of the Quality is Added Value initiative created by members of the dealer business working group. Under this slogan, the initiative is intended to raise awareness of quality among wholesalers and workshops with regard to spare parts and of the services offered by participating parts manufacturers. Possible liability risks will also be explained. VDA and partner associations support the checks on family cars An important milestone in the aftermarket division s activities was the FamilienMobil Sicherheit fährt mit (Family Mobile Safety Comes Too) initiative developed with the associations ZDK (Zentralverband deutsches Kraftfahrzeuggewerbe central association of the German automotive industry) and VREI (Verein Freier Ersatzteilemarkt independent spare parts market association). This initiative promotes greater awareness of safety measures, especially among families. The campaign uses a number of promotions to provide families with support for professional checks on their cars. The heart of the campaign is the family car check. The initiative launched with a pilot phase in October 2010 and will be rolled out across Germany in the ZDK s car guilds in 2011.

217 217 Digression: Measuring aftermarket forecast accuracy Within the VDA Supply Chain Management Aftermarket working group, a measurement of forecast accuracy has been developed with VDA Recommendation The increasingly dynamic developments in the automotive parts market coupled with increasing volatility of demand impose additional challenges on supply chain management. Particular attention here is due to the efficient management of compliance with service level targets while optimizing stock holdings both for the vehicle manufacturer and the supplier. Standardized key performance indicators for the measurement of forecast accuracy are defined in the VDA Recommendation The benefits of the recommended measurement technique include a standardized measuring range from 0 to 100 percent and a positive illustration of an anticipated correlation between forecast accuracy and service levels. Moreover, weighting factors offer the opportunity to focus the forecasts on times when the restocking of parts is possible without escalation measures. In addition, the definition of the key performance indicators offers a range of options for the compilation of specific management reports and checks. The recommendation further describes how systematic use can improve the measurement of service level targets while optimizing the stock situation. This potential can best be achieved by cooperation between OEM and suppliers. The measurement can be generalized with regard to measurement points in supply chain relationships, measuring scope and grid and reference values. VDA Recommendation 9000 is available to download free of charge from the Publications section of the VDA homepage.

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219 The International Motor Show Anna-Klara Maier mechanic in plastics and rubber processing, F.S. Fehrer Automotive GmbH, Kitzingen

220 220 Th e I nte r n ati o n a l M oto r S h o w The International Motor Show The 63rd International Motor Show (IAA Commercial Vehicles) 2010 the turning point for the commercial vehicle industry Under the motto efficient, flexible, future-proof, visitors to IAA (Commercial Vehicles) 2010 in Hanover had ample opportunity to see for themselves the evidence of the innovative power, stability and future-proof quality of the key commercial vehicle sector. In this respect, this IAA marked the end of the slump and the start of the recovery as regards order book entries, production, export and new vehicle registrations. As a result, turning point is a fitting term to describe conditions in the national and international commercial vehicle business. This is also reflected in the outcomes of the trade fair. IAA Commercial Vehicles fully lived up to expectations. With 1,751 exhibitors from 43 countries, this IAA is the second-biggest in terms of exhibitor numbers, observed VDA President Matthias Wissmann at the end of IAA Even if it did not prove possible to match the visitor numbers of 2008, this IAA with its 241,500 visitors represents approximately the decade average. Wissmann added, Against the background of the last two years, it is a respectable outcome. Also, a total of 2,185 accredited journalists from home and abroad reported from the trade fair.

221 221 Exhibitors at IAA 2010 mounted a record number of world premieres, 272 in all. All sectors of the industry had innovative features to show light and heavy trucks, buses, trailers and superstructures, transport logistics, vehicle equipment, and parts and accessories. The exhibitors were positively impressed by the high quality of IAA visitors in particular. Trade visitors made up 85 percent of the total and the majority were decision-makers. The IAA continues to extend its position as the key leading trade fair for mobility, logistics and transport With most general visitors showing interest mainly in the innovations, very many trade visitors now regard IAA Commercial Vehicles as the place to be. But the number of private visitors also rose by a good quarter, a sure sign of the drawing power of IAA Commercial Vehicles. This shows that this IAA has continued to extend its position as the world s leading trade fair for mobility, logistics and transport, says Wissmann. Accordingly, the number of non-german exhibitors (55 percent) was very high in 2010 as well. Turkey had the greatest presence, ranking first with 13 percent among the foreign exhibitors. Overall, exhibitors from 43 countries presented their current products and services at IAA This was the first year for companies from Singapore to attend the show. IAA Commercial Vehicles also excels because, in addition to vehicle manufacturers, almost the whole of the supplier industry associated with commercial vehicles is present as well. The range runs from major system and module manufacturers through development. IAA as a shop window for innovations Key features among the vehicles on show were the latest technological advances in the field of electromobility and alternative drives. An innovation path guided visitors to product innovations in the commercial vehicle sector featuring environment and climate protection and vehicle safety. Here, the focus was on increasing general efficiency and cutting CO 2 emissions, the high degree of flexibility offered by commercial vehicles as a means of transportation and further improvements to the safety features in vehicles. Improvements in aerodynamics led to a lively discussion on issues surrounding the statutory standardization of lengths and weights. On the innovation stage on the open-air site of the Hanover trade fair, visitors were able to watch hands-on demonstrations and see for themselves the practical suitability of the technical developments. These included electric transporters and modern braking systems for heavy goods vehicles. Trade events set a new record The VDA staged 23 trade events for over 3,300 guests, setting a new record high. Here, trade visitors from all around the world discussed a broad range of topics in the fields of logistics, the environment, training and the special standards imposed on goods transportation. For a sign of the importance to the commercial vehicle sector of recruiting and supporting the next generation of engineers, one need look no further than the GoIng information event. This provided an opportunity for final-year high school students to find out about the varied career options offered by the automotive industry; 360 attended a good third more than at IAA Commercial Vehicles This new blood initiative was paired with the IAA school class action, which brought home the varied aspects of the commercial vehicle sector to a total of 4,858 pupils. Interest focused once again on the historic vehicle shows featuring historical vehicles in Hall 23 and the open-air exhibition areas, together making a total display area of more than 8,500 m². The high point was the start, on the last day of IAA, of the 11th Historical Commercial Vehicle Tour of Germany The 64th IAA Commercial Vehicles will run from September 20 to 27, 2012 when once again Hanover will play host to major exhibitors from around the world displaying their latest range of exciting innovations.

222 222 Th e I nte r n ati o n a l M oto r S h o w Future comes as standard 64 th International Motor Show September 15 25, 2011 Frankfurt/Main Looking forward to IAA Cars 2011 This year s IAA Cars in Frankfurt (September 15 to 25) is based on the theme Future comes as standard and addresses the topics of personal mobility in terms of alternative drive systems. So the focus of attention will be on hybrid- and hydrogen-powered drives and more particularly on the role of electric drives for vehicles. Now that the sector has emerged from a period of crisis, visitors can once more look forward to the latest developments, models and studies in the private motor vehicle sector and take a look at the mobility options of tomorrow. A number of exhibitors prevented from attending IAA 2009 because of the rigors of the financial crisis will be back again in Frankfurt this year. It is anticipated that the now perceptible growth trend will feed into IAA as well. And, since things are looking up on the economic scene, higher exhibitor numbers and a good level of attendance are expected this year. IAA, the world s largest automotive exhibition, is a magnet for the media, trade visitors, corporate decision-makers and motor vehicle enthusiasts alike. With its comprehensive ancillary program, IAA gives both trade visitors and the general public the opportunity to experience the global automotive industry in all its variety. A wealth of attractions awaits visitors test drives and various special presentations such as the off-road vehicle course, the historic vehicle show with some of the most important milestones of automotive history and the option of attending some of more than 30 trade events, which address the many and varied aspects of the automotive industry. The year 2009 was a difficult year for the industry, and yet approx. 780 exhibitors from 30 countries attended to present their products on almost 200,000 m² of exhibition space. These included 312 innovations and more than 200 world premieres. Attendance approaching 850,000 visitors was clear proof that, even in times fraught with economic crisis, the motor vehicle has lost nothing of its power to fascinate.

223 223 Exhibitors present drive technologies that point the way forward As in the previous year at IAA Commercial Vehicles, electromobility will be at the forefront of interest at the 2011 fair, as well. The range of alternative drive systems has never been as wide as it is today. IAA is the ideal place to gain an in-depth appreciation of the field, and gives both visitors and exhibitors alike their first opportunity to address the subject together in the Hall of Electric Mobility. Here, exhibitors present environmentally friendly technologies that point the way forward and focus on electromotive power. Indeed, the subject of electromobility will have its own specialist convention to address and discuss the whole Electromobility Ecosystem. Visit for further information on IAA.

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225 Historic Vehicles Ralf Sedlmeier industrial mechanic, special auditor appraisal center, ZF Lenksysteme GmbH, Schwäbisch Gmünd

226 226 H i sto r i c V e h i c le s Stronger Commitment to Historical Vehicles Groundbreaking inventions 125 years ago mark the beginning of the automotive era On January 29, 1886, Carl Benz registered his patent application at the Berlin Patent Office for his gasoline-engine driven vehicle. This is why this date is generally regarded as marking the birth of the car, an invention that was to change the world forever. On November 15, 1886, Robert Bosch founded his Workshop for Fine Mechanics and Electro-technology so here, too, one of the world s most successful automotive suppliers can celebrate its first 125 years. During 2011, numerous events are planned to commemorate these two important anniversaries. The stars will frequently be historic motor cars. It is precisely because the German manufacturers and suppliers produced such extraordinary achievements that nothing would be more fitting than the vehicles themselves to provide a better and more impressive record of the many milestones in the history of motor vehicles. To ensure that these vintage vehicles can still be driven on public roads without restrictions in the future, in 2007 the VDA set up a specialist department called Historic Vehicles. This was at the behest of the manufacturers Audi, BMW, Daimler, Ford, Opel, Porsche and Volkswagen, and the suppliers Bosch and ZF, and it will coordinate all activities devoted to this aim. New EU Directive could prevent the testing of vintage cars Within the EU, amendment of Directive 96/96/EC is currently being reviewed. This Directive deals with the technical monitoring of motor vehicles. The new Directive will define the scope of tests and test methods for the PTI (Periodical Technical Inspection) in EU member states. This will then have consequences for the inspection usually carried out in Germany. One effect of the new Directive might be that historic vehicles are no longer tested or insufficiently tested. The wording in the previous Directive, which defines an exception status for historic vehicles, is quite unlike the new definition. The VDA is therefore committed to ensuring that an exception status for historic vehicles is incorporated into the new Directive and that this will correspond to the definition that is valid for Germany.

227 227 Even after the introduction of the E10 biofuel, many vintage vehicle drivers continue to fuel their vehicles with Super E5 or Super Plus E5 fuels, which are still permitted under existing legislation and contain a maximum of 5 percent bioethane. For this reason, the VDA is urging that the fuel permitted by existing legislation should remain available throughout the country for the long term. Call for the long-term availability of fuel permitted under current legislation In 2010, Directive 2010/40/EU was adopted by the European Parliament. This Directive formulates the framework for the introduction of intelligent transport systems (ITS) in road traffic and for their interfaces with other systems. The aim of using ITS is to make road traffic safer, more efficient and therefore more environmentally friendly. In this, the interlinking of the electronic systems of the vehicle and traffic infrastructure has a crucial part to play. However, the necessary on-board technology cannot be fitted into historic vehicles. For this reason, since the first draft of the Directive, the VDA and the International Federation of Vintage Vehicles (FIVA) have jointly committed themselves to supporting the interests of the many vintage vehicle drivers in the European Union. The Directive now contains a passage that states that the provisions and procedures laid down in the Directive do not apply to historic vehicles. With the amendment of the Vehicle Registration Regulation (FZV) of April 25, 2006, the conditions for obtaining an H license plate were eased by the Federal Ministry of Transport. Since its effective date (March 1, 2007), it is no longer necessary to obtain a special operating license for vintage vehicles. From this date, the inspection required for issuing an H license plate under 23 Road Traffic and Licensing Regulations (StVZO) can be carried out by test engineers of the officially recognized expert organizations as well as by the technical test centers. For this reason, Directive BMV/ StV 13/ of 1997, subject to 21 c Road Traffic and Licensing Regulations (StVZO) for the attainment of an operating license, which was valid until amendment of the regulation, had to be reformulated. The VDA had the opportunity to participate actively right from the genesis of this revised Directive in order to support the needs of vintage vehicle drivers. New Directive governing the issue of the H license plate The automotive industry has a major interest in organizing the standardized implementation of this change in the test and expert organizations, as rendered necessary by the revision of the Directive. This is to prevent any potential weakening of the status of the H license plate and any risk to this special arrangement that might emerge as a result. For this reason, the Federal Ministry of Transport has determined that the responsible test organizations should draw up a harmonized standard operating procedure before the new Directive comes into effect not later than six months after publication.

228 228 H i sto r i c V e h i c le s Parliamentary circle Automotive Cultural Heritage at the German federal parliament Regular meetings of parliamentarians and representatives of the vintage car scene Stefan Röhrig, Director of the Historical Industrial Vehicles Department VDA (Chairman of the Historical Vehicles Committee) The Historical Vehicles Committee is committed to exchanging information on a regular basis with German and European politicians. The VDA recognized at an early date that it was essential to establish direct contact with legislators concerning historic vehicles, politically a marginal concern. There was a need to set up an appropriate interface not only with the German Parliament, but with the European Parliament as well. These parliamentarian intergroups were to promote the mutual exchange of information, bundle as many interest groups together as possible and act as a sort of early warning system. In Germany, the parliamentary circle Automotive Cultural Heritage was founded early in 2009 for this purpose. During the past year, the parliamentary circle met twice to present and discuss current topics. Early in 2010, the members of the circle discussed the issues surrounding the introduction of new limit values for nitrogen oxides (NOx) because of fears about similar restrictions for older vehicles as at first was the case with regard to action against particle dust. Political sources gave an unmistakable all clear signal on this score. Developments behind the potential introduction of an interchangeable license plate were the subject of both meetings. This is because vintage vehicle owners have a special interest in a cheaper form of vehicle registration. Because of reports from the Central Association for the German Motor Vehicle Industry (ZDK) about problems linked to the intended introduction of a vocational grade called vintage vehicle mechanic, some parliamentarians turned their attentions to the affected interest groups. Other subjects addressed were exceptions to the ban on Sunday driving for commercial vehicles, subsequent installation of gas systems while retaining the H license plate, options for reducing the vehicle tax on low cc vehicles and extension of the interval between PTIs for vintage vehicles. Analysis of vehicle registration statistics and some initiatives in their early stages, particularly at European level, led to the question of whether a further increase in the population of historic vehicles might possibly undermine the basic aim of the activities of the parliamentary circle, i.e., the problem-free operation of historic vehicles in the future as well as now. Any restriction can only be achieved by raising the minimum vehicle age (up to now, 30 years) or by tightening the criteria involved in the technical inspection under 23 Road Traffic and Licensing Regulations (StVZO). European Parliament Historic Vehicle Group The aim is to safeguard interests regarding historic vehicles The Year 2010 saw the first meeting of representatives of the European Parliament, FIVA and the VDA. It was resolved to meet regularly as the European Parliament Historic Vehicle Group (EP-HVG), with the aim of safeguarding interests regarding historic vehicles and promoting related concerns. It was further decided to invite subject specialists of other interest groups or representatives of the EU Commission to the EP-HVG. The studies initially focus on the need for a standard EU-wide definition of the term historic vehicles. A further objective is an initiative aimed at obtaining EU Commission for Culture recognition of historic vehicles as an automotive cultural heritage. Also on the agenda for 2011 is discussion of the substance of the Directive and its standardized implementation for determining import duties on vintage vehicles from non-eu countries.

229 229 The H license plate By way of recognition of historic vehicles, the legislature has introduced a special license plate known as the H license plate because of the letter H placed at the end of the alphanumeric characters. To qualify, a vehicle must be at least 30 years old and be in its original, technically flawless condition. Evaluation of the vehicle registration statics by the VDA reveals that the number of such vehicles rises continuously. The historic vehicle tally as of January 1, 2010 was 209,954, of which 188,360 were private motor cars. This represents an increase against the previous year (182,687 vehicles) of 14.9 percent. However, only 56.4 percent of vehicles older than 30 years bear the H plate. Frequently, vehicles fail to meet the criteria for historic vehicles. In other cases, vehicle holders wish to spare themselves the administrative expense of the special registration or are unwilling to accept the comparatively high taxation rate (because of the fixed rate of Euros) if they have low cc vehicles. The VDA is committed to further promotion of the H plate so that in future all vehicles of historic interest are recognizable by this external distinguishing symbol. Number of historic vehicles continues to rise Vintage vehicle interchangeable license plate 17 of the Vehicle Registration Regulation has, since 1994, allowed up to ten vehicles to be driven on a single license plate. Because of the digits 07 after the letters of the identification symbol, this is known as the 07 license plate. Originally, it applied to all vehicles 20 years old or older. However, a redraft of the regulation dating from 2007 means that the criteria applying to the issue of H plates now also apply to the issue of 07 plates. The red 07 plates may only be used, however, for trial and test drives and for journeys to take part in events. First count of 07 license plates

230 230 H i sto r i c V e h i c le s As the respective local authorities are responsible for issuing 07 plates, there used to be no reliable statements of the total number of plates issued in Germany and of how many vintage vehicles they represent. This is why in 2010 the VDA undertook to analyze numbers in conjunction with the Federal Motor Transport Authority and a number of vintage vehicle clubs. The outcome was that holders of a red 07 license plate operated 3.1 historic vehicles on average. By the end of February 2010, a total of 56,107 red 07 license plates were registered with the Federal Motor Transport Authority. This gives a grand total of approx. 176,000 vehicles that are driven with a red 07 license plate. As no registration in the usual sense occurs in connection with 07 license plates, these are not generally recognized in non-eu European countries. The problem has been put forward both in the parliamentary circle Automotive Cultural Heritage and in the European Parliament Historic Vehicle Group. The plan is to develop strategies to resolve this problem during the current year. Joint activities with the world association The USA, Canada and China are the most recent members of the historic vehicle association The world association for historic vehicles is the Fédération Internationale des Véhicules Anciens (FIVA), which was founded in On assuming responsibility for preserving vintage vehicles, the VDA sought to work in close harmony with FIVA. In recent years, the world federation also with the aid of the VDA has been developing into a powerful and dynamic organization. With North America and China joining last year, the federation now numbers all the key automobile nations of the world among its members. The VDA is an advisory member of the Legislation Commission, which mainly deals with contacts and coordination with the international legislatures. As well as consultation activities within the EP-HVG, which are geared to harmonization of historic vehicles within the EU, a further aim is to achieve worldwide recognition of historic vehicles as a technical cultural heritage. Hence the introduction by FIVA at its 2010 annual general meeting of the Charter of Turin. This charter is structured in a way that is similar to the Charter of Venice, which forms the basis for the protected status of buildings and monuments. Once it has been adopted in its final form, it will be submitted to UNESCO. In essence, it sets out a precise definition of a historic vehicle and the reasons for its preservation, and the principles governing use, maintenance, repairs and restoration.

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233 Communication Maurizio Carroccia master mechanic, technical director, launch team, Formel D GmbH, Rüsselsheim, Troisdorf, Böblingen

234 234 C o m m u n i cati o n Communication Strategy Reputation management and communication strategy for Our Cars The logo of Our Cars includes the automotive industry and the public involved in the dialogue: in communication both are communicators and receivers. The design reflects the origin and solidarity of automobile manufacturers and suppliers with Germany. The invention of the motor car in Germany in 1886 also launched 125 years of continuous innovations. Ten patent registrations per day assure the future of mobility in the automotive industry in Germany today. The investment of around 20 billion Euros per year in research and development makes the German automotive industry the front runner in the processing industrial sector in Germany. The industry in second place invests just half of that. Since 2008, this story of innovation covering everything about our cars is being narrated and continually extended as part of the Our Cars campaign. The VDA bases its communications with the public on the website unsereautos.de ( our cars ). It delivers information not only via the story but also through the future strategy of the automotive industry. Particular subjects include climate change, Germany as an industrial location, vehicle safety and responsibility towards future generations. In selecting its communication channels, the German automotive industry does not rely on image campaigns costing millions. Instead, it uses focused, efficient measures with a high degree of effectiveness, which engage deliberately with the current debate and set relevant topics. Transparency, i.e., openness regarding the communicator and the objective, and a readiness for dialogue are further strategic cornerstones of communication. This is the only way to enable an objective, respectful discourse in which perhaps not everyone is of the same opinion at the end of the day, but at least everyone is more informed. The core message of Our Cars is: we will solve the mobility requirements of tomorrow with the spirit of responsibility, innovations and engineering genius. This message also reaches the general public. Since 2008, one of the things we have been asking the people about regularly is to what extent they agree with the following sentence: German cars are the expression of German engineering genius. This sentence covers some important dimensions: loyalty to the motor car, perception of the automotive industry as part of the German identity, an assumption of quality and innovative power. German automobiles are examples of German engineering art Verdict of those questioned from 2008 to 2010, in percent Spring Autumn Sources: GfK, infratest dimap

235 235 Whereas in spring 2008, before the start of the Our Cars campaign, 69 percent of subjects in a representative survey agreed with the statement, in the fall of the same year, after the campaign had started, this figure had risen to 73 percent. In 2009, agreement after continuation of the campaign reached 82 percent and at the end of 2010 it was as much as 85 percent. Early in 2010, the service offered by Our Cars was extended through materials on the subject of electromobility for the teaching of natural sciences and political sciences. Questions like What is electromobility and how does it function? What are the hurdles, preconditions and opportunities associated with electromobility? were demonstrated and illustrated graphically. In a defined area, teachers also received suggestions for questions to ask and pointers to other resources for research. At the same time, attention was paid to naming sources that did not necessarily square with the views of the automotive industry but which bring valid arguments into the debate, e.g., the Heinrich Böll Foundation. Mail outs to teachers in approx. ten thousand German schools led to a response rate, i.e., a download rate, of 45 percent. This laid the foundation for a truly electrifying subject, which becomes a worthy component of classroom teaching. Even the official portal to the German Year of Knowledge Energy 2010 incorporated the teaching materials for schools. In 2011, the campaign will continue to be dedicated to electromobility but will cover the whole subject of innovation as well. This is because it is with innovations that the German automotive industry proves its technical supremacy. Through its innovations, the automotive industry is the master of efficiency. In all ten vehicle segments, from the smallest car to the family van, the Federal Motor Transport Authority has measured the CO 2 readings for new vehicle registrations of the main German brands and found them to be lower than imported brands. In six out of ten segments, the Germans are even the CO 2 champions. And what the registration statistics of the Federal Motor Transport Authority confirms is reflected in the 2010/2011 automobile environment list of the ecologically minded German motor club (Verkehrsclub Deutschland). Some 70 percent of all top places awarded in the VCD test went to major German brands. But innovations not only bring home top rankings in the present, they are also a guarantee of functionality in the future. Mobility tomorrow does not mean simply the continuation of today s solutions. It demands the courage, the inventiveness and the ability to strike out in new directions. Given its tradition of innovation, the German automotive industry is ideally equipped for this. At the start of the anniversary year, the VDA together with the Kommunikation und Wirtschaft publishing house published the book Automobilstandort Deutschland (over 200 pages). Leading managers in the industry and experienced motor journalists each look in their own particular way at the country of birth of the car and the strength of its industry Masters of efficiency Average CO 2 values for new registrations and segments (in g/km) Very small vehicles Small vehicles Compact class Middle class Upper middle class Upper class Offroad vehicles Sports cars German Group brands Mini vans Large capacity vans Imported brands Sources: KBA, VDA

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237 Index Jens Schumacher industrial technician/supervisor, manager, quality management, Schürholz GmbH & Co. KG, Plettenberg