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Business

Asian demand drives German auto industry growth

The German auto industry is predicting a 21 percent increase in exports for 2010 thanks to high demand in Asia and the United States. Analysts say manufacturers' emphasis on research and development is paying off.

Cars on a cargo ship, against an orange sky

The auto industry is one of Germany's biggest exporters

There's no doubt that this has been a good year for German carmakers, and equally little doubt that that has much to do with China. Volkswagen, Porsche, BMW and Mercedes have all made their mark on the sprawling Asian landmass and notched up sales figures that far outstripped their expectations.

In the first eight months of 2010, the Chinese car market almost doubled in size with German manufacturers securing a 53 percent increase on the sales of its cars.

In an interview in Monday's Die Welt newspaper, the president of the German Association of the Automotive Industry (VDA), Matthias Wissmann, said that German manufacturers would have produced a total of 5.45 million passenger cars by the end of the year. The lion's share will have gone to international markets.

Rows of cars waiting to be shipped

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"Over the whole year, we are expecting exports to rise 21 percent, which equates to 4.15 million passenger cars," Wissmann said. "The strength of the Asian market, especially in China, and also the recovery of the US market, have fuelled exports."

So far this year, Chinese consumers have bought 1.3 million German vehicles.

Development paid off

Wissmann cited the decision not to cap but increase development budgets during the crisis as one of the main reasons for the surge in popularity of German cars in Asian countries.

He said it had given German manufacturers a technologically competitive edge and enabled them to come up with the right range of cars.

The VDA president added that the German domestic market also performed better than had been expected in 2010. There had been worries that demand would stagnate following the government's decision not to extend its car scrapping subsidy scheme, whereby German car owners were paid 2,500 euros ($3,470) if they traded in a vehicle that was at least nine years old and purchased a brand new one.

Workers at a VW assembly line

As company profits rise, auto workers want higher pay

Workers have responded to the flourishing market with calls for wage increases planned for 2011 to be introduced early.

Audi and other parts of the Volkswagen concern, whose operating profit had trebled by the end of the third quarter to 4.8 billion euros, have already agreed to an increase.

BMW, Porsche and Daimler have yet to make a decision.

Author: Tamsin Walker (dpa, AP)
Editor: Sam Edmonds

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