German Auto Industry Association Has Positive Outlook

FRANKFURT, Sept 1, 2003; Nick Tattersall and Peter Wuebben conducted this interview for Reuters: After almost four years of decline, Europe's biggest car market stabilised further in August and could finally start to grow again next year, the head of Germany's VDA auto industry association said on Monday.

For 2004 we have a good chance not just of having stabilised after four years, but of improving and being back over 2003's level," VDA President Bernd Gottschalk told Reuters in an interview.

Gottschalk said German car makers had seen production and sales stabilise in recent weeks, although he noted that orders for August would probably have remained weak as buyers awaited the Frankfurt international auto show later this month, where German manufacturers are due to unveil 73 new models.

This year's Frankfurt show -- one of the highlights of the industry calendar -- will see the launch of a number of new mass-market models expected to help trigger a recovery in the sector.

Europe's biggest carmaker Volkswagen will show off the fifth generation of its Golf hatchback, the second best-selling car of all time, while General Motors' German unit Opel will unveil its new Astra, a direct competitor to the Golf.

Gottschalk said the new models, combined with increasing consumer confidence and the end of a debate over higher company car tax were all positive signals for the car industry, which accounts for around a tenth of industrial output in Germany.

He also noted that the average age of cars in the country was high, which was likely to mean many buyers would be in the market soon for replacements.

"Outside factors were never as favourable over the past three years as they are now... The business climate signals new confidence, a readiness to spend," he said.

"There has never been an upturn in the German economy without the auto industry. We have a chance that the car industry could act as a cart horse pulling the German economy away from recessionary tendencies."

Gottschalk said he still expected 3.25 million new car registrations in Germany by the end of the year, the same level as last year, although exports may come in above the 3.55 million vehicles the VDA originally forecast for 2003.

He noted that German cars were increasingly seen in export markets as premium products, meaning that while sales volumes in the U.S. market had grown eight percent in the first half, the revenue value of those sales had risen by almost a quarter.