German Automakers Bet on U.S. Market and Win

German carmakers, at least, had a different vision of the future.

The recovery in the U.S. auto market, which produced big earnings growth at Chrysler and Ford in their fourth quarter, has also been a boon for Germany’s Big Three — Daimler, BMW and Volkswagen.

Their double-digit increases in U.S. sales last year reflected an overall surge in demand by American buyers for European and, above all, German products. Well-designed vehicles and machinery, so coveted a Germany specialty that they can often fetch premium prices, were by far the biggest categories of European exports to the United States.

As a result, overall German exports to America rose 24 percent in October from a year earlier, outpacing the 18 percent growth for euro zone exports to the United States.

In many ways, German success has let German carmakers invest in further success when it comes to the American market. The German companies are cashing in on years of commitment to the United States, which remained an important market for them even as the global auto industry trained its sights on China.

Volkswagen, for example, has invested $4 billion in the United States since 2008, building a factory in Chattanooga, Tennessee, that began churning out Passat sedans in 2011.

“Five years ago we reset the clock here in America,” Martin Winterkorn, the chief executive of Volkswagen, said in Detroit last month. “The Passat was made in America for America.”

BMW and Daimler’s Mercedes-Benz unit have been making sport utility vehicles and other autos in America since the 1990s: BMW in Spartanburg, South Carolina, and Mercedes in Tuscaloosa, Alabama. Both brands have expanded their appeal in the United States by moving carefully into more affordable parts of the market, for example with an entry-level Mercedes sedan for less than $30,000.

That presence put them in position to take advantage of the revival of the U.S. car market. BMW vehicle sales in the United States rose by 14 percent last year including the Mini brand; sales of Daimler’s Mercedes and Smart brands increased more than 15 percent; and Volkswagen’s U.S. sales soared 34 percent, including Audi brand cars.

For Mercedes and VW, those were better growth rates than in China, and helped to offset slower sales there.

Germany’s success contrasts with results by European rivals like Renault and PSA Peugeot Citroën, which abandoned the U.S. market decades ago. Now the French car makers are short of ways to counterbalance the stricken European market. It is probably too late for them to re-enter the U.S. market, even if they could afford the cost of re-establishing a dealership network.

Mercedes and VW are so well placed in America that they even did a little strutting during the televised Superbowl football championship on Sunday, airing splashy commercials.

In the Mercedes spot, the actor Willem Dafoe, playing the devil, offers a young man a new CLA sedan in exchange for his soul. After a fantasy sequence in which the young man cuddles with the model Kate Upton, dances alongside Usher and overtakes Formula One cars on a racetrack, he sees a billboard advertising the CLA for $29,900. He realizes he can afford one without Satan’s help.

The spot is part of a Mercedes strategy to appeal to a younger, less affluent market.

The euro zone recession would clearly be much worse than it is without support from U.S. customers. While Germany has been the main beneficiary, accounting for 40 percent of euro zone exports to the United States, countries including France, Italy and Spain also recorded big gains in sales in America of products that span categories from chemicals to wine.

Britain, which is in the European Union but not the euro zone, expanded exports to America by 11 percent in October from a month earlier. That made Britain second to Germany in total sales of goods to the United States that month, with about €4 billion, or $5.4 billion, in October versus €8 billion for Germany, according to official figures.

At least part of Britain’s gain came from sales in America of the BMW Mini, which is made in Oxford, England.

Article source: http://www.nytimes.com/2013/02/05/business/global/german-automakers-bet-on-us-market-and-win.html?partner=rss&emc=rss