April 19, 2024

Bet on U.S. Pays Off for Germany’s Carmakers

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

The recovery in the United States auto market, which produced big earnings growth at Chrysler and Ford in their fourth quarters, has also been a boon for Germany’s big three — Daimler, BMW and Volkswagen.

The double-digit increases in their American 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, the success of the German carmakers has let them invest to produce further success in 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, Tenn., 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, S.C., and Mercedes in Tuscaloosa, Ala.

That presence put them in position to take advantage of the revival of the American market.

Nearly a third of the vehicles that BMW sells in America are built in that country, according to LMC Automotive, a research firm in Troy, Mich. Mercedes and VW both produce about a quarter of what they sell in the United States in local factories.

BMW and Mercedes have also expanded their appeal in the United States by moving carefully into more affordable parts of the market. Mercedes, for example, sells an entry-level Mercedes sedan for less than $30,000.

All of that has contributed to a sales surge. BMW vehicle sales in the United States rose 14 percent last year, including the Mini brand; sales of Daimler’s Mercedes and Smart brands increased more than 15 percent; and Volkswagen’s sales soared 34 percent, including Audi brand cars.

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

The German automakers’ strong financial results contrast with those of European rivals like Renault and PSA Peugeot Citroën, which abandoned the United States market decades ago. Now the French carmakers are short of ways to counterbalance the stricken European market. It is probably too late for them to re-enter the United States, even if they could afford the cost of re-establishing a dealership network.

Mercedes and VW are so well placed in the United States that they even did a little strutting during the televised Super Bowl football championship on Sunday, showing 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 the devil’s help.

The euro zone recession would clearly be much worse than it is without the income that European companies are bringing in from the United States. 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.

Bill Vlasic contributed reporting from Detroit.

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

Sticker Shock for Travelers as Airfares Climb

But with the lowest economy-class fare this year advertised at about $1,500 — more than twice the $700 she paid in 2009 — Ms. Benjamin is considering ringing in 2011 with her husband’s family in decidedly chillier Belgrade. Flights there cost half as much as those to the Caribbean.

“It’s hard for me to bite the bullet when it’s only 1,700 miles,” from Washington to Antigua, she said. “That’s just under 90 cents per mile.”

As Ms. Benjamin and others have been discovering in recent months, airfares in most of the world are on the rise as the global economy picks up and demand for air travel climbs, particularly for business trips. Airlines, meanwhile, have been reluctant to add more flights to meet that growing demand. That is increasing pressure on ticket prices and making for packed planes and longer standby lines as the year-end travel season approaches.

This has been a boon, of course, for an industry that is expected to roar back into profit this year, to the tune of $8.9 billion. That comes after airlines collectively lost nearly $26 billion during the previous two years, according to the International Air Transport Association, an airline industry group. Many of the world’s leading airlines are reporting that the three-month period ended Sept. 30 was one of their most profitable quarters in years.

The degree of sticker shock varies significantly by region and by class of seat, with fares on some routes still at or below those of a year ago, despite some large increases in traffic.

Average domestic and international fares worldwide are up by less than 4 percent from a year ago, according to figures from the transport association. And while fares may continue rising for some time, industry executives say the increases next year are likely to be smaller.

Travelers in North America have experienced the steepest price gains, particularly for business travel. Average one-way fares for business- and first-class travel within North America have soared this year. They were up a staggering 140 percent from a year earlier, to $676 in August, a peak travel month and the most recent for which the transport association has data available. Economy fares rose 3.6 percent.

Fares between the United States and Europe also rose sharply, especially for economy-class seats. The average one-way fare in August was $455, a rise of 20 percent from a year earlier, while the average premium-class fare was $2,087, an increase of 11 percent.

“It’s really hard to find the $600 tickets anymore,” said Philip Guarino, 40, an American who runs a consulting business in Milan and Boston. “The basic fare from the East Coast to Europe is closer to $1,000, and most likely closer to $1,200.”

A business-class ticket to Milan costs about $3,400, he said, compared with about $2,400 four years ago. “The pricing now in business is at my upper limit,” he said.

Elsewhere, economy-class fares between Europe and Asia have risen 10 percent from 2009, according to the transport association, while those between North and South America have increased about 13 percent.

“All of the airlines have done a good job, as demand has picked up, of not adding very many more seats,” said Christa Degnan Manning, head of research at American Express Business Travel. “I expect them to continue to manage that very closely.”

Dan Hodgdon, 44, said he had given up trying to fly between the Bangkok offices of his spa-supply business, which is based in Los Angeles, and his vacation home in southern France because fares on the route had become “ridiculously” high.

Referring to the Los Angeles airport, he said, “It is far less expensive now to fly from LAX to anywhere in Europe than from Bangkok.”

“This was not always the case in early 2009,” he added.

Travelers in other parts of the world can still find good deals. Within the Asia-Pacific region, for example, the average one-way economy-class fare was $318 in August, a decrease of 0.4 percent from August 2009, while premium-class tickets were nearly 2 percent less expensive, despite a 26 percent jump in traffic on those routes.

Article source: http://feeds.nytimes.com/click.phdo?i=bb1e3c3defa47ac71736ed52104f060e