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8/8/2019 Automotive Industry in Germany Invest in Germany

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The Automotive Industry in Germany Driving Performance through TechnologyIndustry Overview


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The Automotive Industry in Germany

Germany is the Geo-

graphic and Economic

Center of Europe

If Germany is known for one thing, its

the automotive industry. But were not

just sitting back and riding on the coat-

tails of our reputation as the home

of the automobile. Our automotive in-

dustry continues to operate at fullthrottle. Automotive is Germanys larg-

est industry by turnover, accounting for

more than a third of total domestic R&D

spending. German car manufacturers

and suppliers are world leaders in inno-

vation with more than 3,500 registered

patents every year. With 47 OEM com-

ponents and assembly plants, 32 indus-

try-related innovative clusters, 3,600

tier 1, 2, and 3 suppliers and Europes

most experienced workforce, Germany

is the primary location for technology-

driven companies active in all stages of

the value chain.

Member States of the European Union


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Industry Overview 2008www.invest-in-germany.com 3

1 Source: ACEA, 2008

2 European Union 25 + EFTA 3 (Switzerland,

Norway and Iceland)

The German Automotive

Industry in Numbers

- Number one automotive market by pro-

duction and sales: accounting for 34 per-

cent of all passenger cars produced and

20 percent1 of all new registrations in

Europe2

- 5.7 million passenger cars and 500,000

trucks and buses produced at German

plants in 2007

- 25 passenger car assembly plants - more

than one third of Europes installed

capacity

- Over EUR 290 billion in annual combined

revenues for manufacturers and suppli-

ers in 2007 seven percent growth com-

pared to 2006

Passenger Car Production in Europe 2007 in Million Units

- A year-on-year increase of 310,000 units

in passenger car production by far the

largest in Europe

- Industry R&D expenditures in 2007 excee-

ding EUR 18 billion - more than a third

of total R&D spending in the German

industry

- 745,000 people work directly in the auto-

motive industry - 43 percent of them

employed at the supplier level

Change in Passenger Car Production in Europe 2006/2007 in Thousand Units

6

5

4

3

2

1

0

Germany

France

Spain

UK

CzechR.

Italy

Belgium

Poland

Others

Source: ACEA, 2008

5.7

2.6

2.2

1.5

0

.9

0

.9

0.

81

.4

0.7

300

200

100

0

-100

-200

Germany

Spain

UK

CzechR.

Poland

Italy

Fracne

Source: ACEA, 2008

310

117

92

77 6

3

18

-169

-83

Belgium


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The Advantages of Ger-

many as a Location for

Automotive Investments

Advantages abound across all segments

within the automotive value chain. The

leading role played by German manufac-

turers and suppliers in the international

vehicle industry further demonstrates

Germanys competitive edge as an out-standing business location.

Market

Germany hosts the largest concentration

of OEM plants in Europe - creating con-

siderable production volume, client and

product diversification advantages for sup-

pliers. Established suppliers in Germany

are able to access nine different OEMs

and their respective decision centers, 25

assembly plants (an impressive one third

of Europes total installed capacity) as well

as production facilities of almost all top

100 tier 1 suppliers.

Personnel

Germanys excellent highly-skilled labor

force has been the key to success for the

German automotive industry. Benefiting

from the countrys unique education sys-

tem geared to meet industry needs, the

industry can count on a direct workforce of

almost 750,000 highly-trained and experi-

enced people. One in nine employees work

in automotive-related R&D. The steady

flow of mechanical engineers graduat-

ing from approaching 100 universities andcolleges is helping to ensure continuity of

German engineering excellence.

4 Industry Overview 2008

Value Chain

ActivityDevelopment Design Manufacturing Distribution

Type of Facility R&D Center Design Center Production &

Assembly Site

Logistics Center

No. of Automo-

tive Locations

in Germany

211 212 253 334

Germanys

Share of the

European Total

42% 36% 20% 34%5

1: OEM R&D centers

2: OEM design centers

3: OEM final assembly plants for passenger vehicles;

the total number of OEM production sites in Germany is 47

4: Automotive logistics center

5: Share of German companies among top 100 European logistics prov iders

Source: Automotive News Europe, Nov. 2006; German Federal Logistics Association

(Bundesvereinigung Logistik), 2006; Invest in Germany Research, 2008

BMW Group, production plant, CO2-booth underframe


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Mechatronics/Microsystems

Engineering

Microsystems

Micro and Nanotechnology

Mechatronics

Microelectronics

Power Engineering

Fuel Cells/Hydrogen

Power Electronics

(Hybrid Engines)

Traffic and Transportation

Automotive Engineering

and Telematics

Information and

Communication Tech.

Navigation, Telematics

Traffic Systems

Software Engineering

Virtual and Augmented Reality

Environmental Technology

Recycling Technology

Industrial Manufacturing

Adaptronics

Automotive

Carbon Fiber Reinforced Plastics

Virtual Engineering

Mechanical Engineering

Process Technology

Materials Science

Component Behavior (Modeling)

Surface Engineering of Plastics

Lightweight Construction

Natural Fiber Composites

Textile Research

1

R&D

Germany is home to 42 percent of all Euro-

pean OEM and tier 0.5 supplier automo-

tive R&D centers. This makes the country

the most important automotive develop-

ment activity location in Europe. German-

based suppliers and service providers

profit from close interaction with their

clients from the pre-development stage.

They can take advantage of joint research

activities with some of the worlds leading

automotive technology research institutes

and universities. Numerous innovation

clusters integrate industry, science and

education in automotive-related areas

including mechatronics, microelectronics,

mechanical engineering, manufacturing

processes, and material sciences.

Technology Leader

From machine building to electronics,

Germany is the technological leader in all

automotive-related industries.

Physical Infrastructure

Located at the heart of Europe, Germany

offers a sophisticated infrastructure that

integrates state-of-the-art transporta-

tion networks with the most modern and

cost efficient IT and telecommunications

systems available today. Not for noth-

ing is Germany Europes number one in

logistics. Germanys exceptional strength

in this area has been underlined by the

World Economic Forums (WEF) Global

Competitiveness Report 2008 in which

the German economy took first place

for infrastructure. It is this world class

infrastructure which supports the con-

tinued success of the highly efficient and

smooth operating automotive logistics

environment.

Incentives

Germany offers investment incentives of

up to 50 percent of capital expenditure. In

addition, extensive support is also pro-

vided for employment and R&D purposes.

Stable Investment Environment

Social, economic and political stability

all provide a solid base for your corpo-

rate projects. Our judiciary and civil ser-

vices are highly professional. Contractual

agreements are secure and intellectual

property is strictly protected in Germany.


Automotive Industry-Related Networks of Competence in Germany

Dresden

Kiel

Potsdam

Stuttgart

Hanover

Mainz

Wiesbaden

Saarbrcken

Erfurt

Magdeburg

Schwerin

Dsseldorf

Munich

Berlin

Hamburg

Bremen

SWITZERLAND

FRANCE

THE NETHERLANDS

POLAND

CZECH REPUBLIC

BALTIC SEA

BALTIC SEA

BELGIUM

LUXEM-

BURG

Mecklenburg-Vorpommern

Brandenburg

Saxony-Anhalt

Saxony

Thuringia

Bavaria

Baden-Wrttemberg

Hessen

Saarland

Rheinland-Pfalz

North Rhine-Westphalia

Lower Saxony

Schleswig-Holstein

DENMARK

NORTH SEA

NationalBorder

(Federal)State Borders

(Federal)State Capital

City-State

Source: Federal Ministry of Economics and Technology, 2007

1

2

3

4

1

2

1

2

3

4

1

2

3

4

5

6

1

2

3

4

5

1

45

3

2 1 1

4

3

3

1

4

1

1

1

2

2

1

3

6

2

1

5

24

3


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Opportunities

No other country in Europe can boast a

comparable concentration of automotive-

related R&D, design, supply, manufac-

turing, and assembly facilities. No other

country in Europe provides the same new

investment opportunities offered by the

German industry.

- Within the next five years, 16 new vehicle

programs - representing an accumulatedvolume of more than two million units at

peak - will be launched in Germany. This

represents one third of all new program

launches in Europe within 2008 and 2012.

- German vehicle manufacturers are com-

mitted to delivering further CO2emission

reductions. The goal for 2012 is clearly

set by the European Commission - new

vehicles are to produce not more than

130 g/km by means of vehicle technology

improvements and other contributory fac-

tors. A further 10 g/km reduction is fore-

seen through other improvements and

increased use of bio-fuels. The industry

is building on the countrys longstanding

experience in environmental technologies

to secure a leading position in all fields of

sustainable mobility.

This approach translates into a strong

demand for innovative products that en-hance fuel economy and energy efficiency.

Powertrain solutions providers, battery

manufacturers, advanced materials (includ-

ing light metals and composites) suppliers,

and electronics systems suppliers are all

finding unique business opportunities in

Germany.

Germany

20

.4

Italy15

.3

France

11

.3

Spain10

.8

CzechR.

9.1

Belgium8

.3

Poland5

.4

Portugal3

.0

Sweden

2.0

UK1

.1

Source: European Light Vehicle Industry Forecast, Global Insight, 2007

No. of New Programs

Accumulated Peak Volume in 100,000 Units

New Vehicle Programs and Forecast Volumes

in European OEM Plants (SOP 2008 -2012)

16

12

7

54 4

1

3 3

8

- The industry is supported by an active

innovation policy and significant pub-lic investments. A total of EUR 15 billion

has been made available by the German

Federal Government for R&D projects

in cutting edge technologies. Applicable

research fields in the automotive industry

include: alternative fuels, fuel cell tech-

nology, alternative powertrain and energy

storage systems, active safety, vehicle-to-

X communication and traffic management

systems. All companies active in Germany

(regardless of country of provenance) are

eligible.

Mercedes-Benz Direct Hybrid concept vehicle


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Industry Overview 2008 www.invest-in-germany.com 7

Incentives

Cash Incentives

Investment Incentives Package Operational Incentives Package

Reduced Interest

Loans

R&D IncentivesLabor-Related

Incentives

Public Guarantees

Investment GrantKfW Loans

(National Level)

State

Investment

Allowance1 State Development

Banks

Combined State/

Federal

GrantsRecruitment

Support

LoansTraining

SupportSilent/Direct

PartnershipWage Subsidies

+

1) only in eastern Germany

Types of Incentives

Source: Invest in Germany Research, 2008

Incentives for Investments

in the Automotive Industry

Germany offers numerous incentives for

all investors - regardless of whether they

are from Germany or otherwise. There is

a large selection of programs designed

to support a wide variety of business

activities at different stages of the invest-

ment process available. Support ranges

from cash incentives for the reimburse-ment of direct investment costs to incen-

tives for labor and R&D.

Germanys Investment

Incentives Package

Investors production facility set-up costs

can be significantly reduced using a num-

ber of different measures from Germanys

extensive investment incentives package.

The package consists of cash incentives,

loan programs offering reduced interest

rates and public guarantees at state and

national level.

The amount of these investment incen-

tives generally depends on three factors:

project scope, investor company size and

the new investment location. Investment

incentives can reach up to 50 percent of

eligible expenditures once these factors

have been considered.

BMW Leipzig plant,

central building:

Production BMW 3 Series


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Cash Incentives

The main instrument of Germanys invest-

ment incentives package are cash incen-

tives provided in the form of direct

investment grants. Germany will make

more than EUR 2.3 billion in cash incen-

tives available in 2008.

Investment grants are offered in sev-

eral incentive regions in Germany. Eligi-

ble investment costs include the purchase

or production costs of buildings, machin-

ery and equipment. The purchasing costs

of intangible assets are likewise eligible.

In general, investment projects must cre-

ate long-term jobs in order to benefit from

investment grant provision.

In eastern Germany, investment grants

are complemented by the Investment

Allowance (Investitionszulage IZ), which is

usually provided in the form of a cash pay-

ment and/or tax credit. As with investment

grants, eligible Investment Allowance

costs include the purchase or production

costs of buildings, machinery and equip-

ment. Because the Investment Allowance

is a tool specifically created to support the

eastern parts of Germany, all equipment

financed through the investment allow-

ance must remain in eastern Germany for

at least five years upon completion of the

investment project.

Interest-Reduced Loans

Special loan programs make up a second

component of Germanys investment incen-

tives package. They are offered by publicly

organized financial institutions.

These programs usually offer loans at

below-market interest rates and subordi-

nated loans similar to equity.

The provision of such loans makes it easier

for investors to access additional funding

from public banks.

Public Guarantees

The investment incentives package is com-

pleted by public guarantees. This tool is

offered by the state and the federal govern-

ment to help secure private bank loans.

VW plant Wolfsburg Golf GTI and Golf R32 production (body construction)


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Germanys Operational

Incentives Package

Labor-Related Incentives

Labor-related incentives are available

throughout Germany. The Federal Employ-

ment Agency and all German states offer

a range of different labor-related incentives

programs. They can be divided into three

main groups: programs focusing on recruit-

ment support, training support, and wagesubsidies respectively.

Incentives for R&D Projects

Germany offers several incentives pro-

grams targeted at reducing the operating

costs of R&D projects. Programs operate

at the regional and national level wholly

independent from investment incentives.

At the national level, all R&D incentives

programs are subsumed under the Fed-

eral Governments four-year High-Tech

Strategy. The High-Tech-Strategy defines

specific sectors with a high dependency on

new high-tech developments. Each sector

comprises various R&D programs. More

than EUR 770 million is available for R&D

projects in the automotive and traffic tech-

nologies sector.

The High-Tech Strategy: Sectors with Relevant Budgets 2006-2009 in EUR Million

Source: German Federal Ministry for Education and Research (BMBF)

3,650

2,000

1,180

800

770

640

430

420

420

310

300

270

250

220

150

80

50

Space technologies

Energy technologies

Information and communication tech.

Health research and medical technology

Automotive and traffic technologies

Nanotechnologies

Biotechnology

Environmental technologies

Materials technologies

Optical technologies

Plants

Aviation and aeronautical technologiesProduction technologies

Microsystems technology

Maritime technologies

Security research

Services

Most R&D projects related to the automotive industry are financed through programs

focusing on automotive and traffic technologies providing an incentives budget of

EUR 770 million. According to application focus, possibility exists to participate in

other funding programs (e.g. materials, production, microsystems, et al.).

German Aerospace Center (DLR), Automotive drive simulator


10/12



Invest in Germany Closely Supports Your Project Management

Team throughout the Entire Investment Decision Process

Investment Decision Process Areas of Invest in Germany Support

Invest in Germany Helps You

Our teams of industry experts in the auto-

motive and related industries will assistyou in setting up your operations in Ger-

many. From design and engineering cen-

ters to manufacturing and assembly

plants, we can support your project man-

agement team from the earliest stages of

your expansion strategy.

We do this by providing you with all the

industry insider information you need

covering everything from automotive

markets and segments to industry trends

and the supplier landscape; automotive

technology R&D to industry regulation and

the domestic labor market.

Profit from our experience and know-

how to identify the investment location

which meets your specific investment

criteria. We help turn your requirements

into concrete investment site proposals,

providing free consultation services to

ensure you make the right location deci-

sion. We coordinate site visits, meetings

with potential suppliers, service provid-

ers, technology partners, universities

and other institutes active in the automo-

tive field. Our team of experts is at hand

to provide you with the relevant back-

ground information on Germanys tax

and legal system.

Invest in Germanys financial experts

help you create the appropriate financial

package for your investment and bring

you into contact with suitable financial

partners. Specialists provide you with

detailed information about available

incentives, support you with the applica-

tion process, and arrange contacts with

local economic development corporations.

Take advantage of our range of free of

charge services.

Investment Process Milestones

Invest

inGermanyKeySupportAreas

Strategy Evaluation Decision and Investment

Information

Consulting

and Project

Coordination

- General market information

- Industry guides/reviews

- Conditions for investment, e.g. economic data,labor mar ket,incentive programs, and tax & legal framework

- Proactive identification

of business opportunities- Identification of project-

specific location factors

- Discussion of marketentry strategies

- Advice on project financing

- Model calculationof potential incentives

- Cost factor analysis

- Identification of possibilitiesfor cooperation with suppliers,R&D institutes, technologypartners, etc.

- Organization of site visitsand fact finding missions

- Contact with the economicdevelopment corporations ofthe German states

- Support with finalsite decision

- Selection of project partners

and facilitators (serviceproviders,financial partners)

- Negotiations withrelevant authorities

- Assistance with the incentivesapplication process

- Seamless project handover

to the economic develop-ment corporation in theselected state


11/12

Picture credits Cover

Photograph: Daimler

Page 2 Germany is the Geographic and Economic Center of Europe

Graphic: www.typoly.de

Page 4 The Advantages of Germany as a Location for Automotive Investments

Photograph:

BMW Group

Page 6 Opportunities

Photograph: Daimler

Page 7 Incentives for Investments in the Automotive Industry

Photograph: BMW Group

Page 8 Incentives for Investments in the Automotive Industry

Photograph: Volkswagen

Page 9 Germanys Operational Incentives Package

Photograph: DLR Institut fr Verkehrssyteme

Imprint Publisher & Editor

Invest in Germany GmbH

Friedrichstrae 60

10117 Berlin

Germany

T. +49 30 200 099-0

F. +49 30 200 099-111

[email protected]

www.invest-in-germany.com

Managing Director: Michael Pfeiffer

Director Marketing Communications: Bettina Knape

Contact Automotive Industry: [email protected]

Conception, Layout, Text, Translations

Invest in Germany

Supported by

Federal Ministry of Economics and Technology

NoteInvest in Germany, April 2008

All information provided by Invest in Germany is for informational purposesonly and not legally binding. Invest in Germany does not accept liability for

inaccuracies or errors in translation.


12/12

About Us

Invest in Germanyis the inward investment

promotion agency of the Federal Republic

of Germany. We assist and advise potential

investors interested in Germany. Foreign

enterprises planning to establish theirbusiness operations in Germany can ob-

tain information on the business environ-

ment, such as the corporate investment

framework, tax regulations, and subsi-

dies.

Our range of services includes strategic

planning, market research and competi-

tive analysis. Our experts provide compre-hensive project management and support

services from site selection to the final

realization of the investment. All inquiries

are kept confidential and our services are

free of charge.

We support investors from our headquar-

ters in Berlin and from our offices in the

US, China, and Japan.

Headquarters

Invest in Germany GmbH

Friedrichstrae 60

10117 Berlin

Germany

T. +49 30 200 099-0

F. +49 30 200 [email protected]

www.invest-in-germany.com

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