German Cars Still Stars...For Now
July 5, 2005
Stroll down a German street these days and it becomes clear that car-buying habits -- just like population trends -- are edging toward the multicultural. Nestled among the Mercedes, BMWs and Volkswagens are numerous Toyotas, Renaults and Hyundais.
The German Association of Motor Vehicle Importers (VDIK) reports that the market share for foreign carmakers in Germany is around 35 percent, with a slight increase in new registrations predicted for 2005.
Are Germans suddenly less interested in buying German cars? Could it be that premium brands such as Mercedes Benz are losing their shine? Not necessarily.
"The situation has changed a bit," Peter Brietsche of the German market research institute GfK Group said in an interview with public broadcaster ARD.
"Mercedes was always a dream that we grew up with. It symbolizes a car that's big, safe and has cachet. It's the car your boss drives. Being able to buy such a car was a sign that you'd made it."
That still holds true in Germany, despite the fact that Mercedes' image has taken a bashing following Daimler Benz's disappointing merger with US carmaker Chrysler and a series of embarrassing technical and quality problems, Brietsche said.
"We remember how the A-Class rolled over while swerving during the so-called 'elk test,' or how there were quality problems with the M-Class at the beginning," said Brietsche. "Despite the technical problems, the image of the brand wins out in the end."
His theory is validated on the street. Taxi driver Jens Kretschmer spends a lot of time in his Mercedes, and says he would never even consider a foreign car.
"Not for a taxi, at least," he said. "German cars have a much longer life, they're more reliable."
When asked if reports about the quality problems at Mercedes had changed his view at all, he simply shrugged.
"Foreign cars have problems, too," he said.
Price point
But foreign cars tend to be much cheaper than German cars. Tough economic times and a general trend towards thriftiness have made foreign cars more appealing -- something that has not escaped foreign importers' notice. Their target group? Cost-conscious private consumers.
"Germans still prefer to buy German quality," Brietsche said. "But these days, people are prepared to make compromises. It's that sense of rationality that is opening the door for other brands."
In order to compete, German carmakers find themselves entering the kind of price wars typically seen in the United States. Now, it's not uncommon to get a discount of up to 3,000 euros ($3,570) on a new German car. Customers feel less bound to a particular brand than they did in the past, and are eager to reap the benefits of shopping around.
Corporate equals German
Still, not everyone can afford to follow their wallet when choosing a vehicle. In most societies, clothes make the man. In Germany, clothes -- while important -- are secondary to the car you drive. The business executive who pulls into his reserved company parking spot in a Lexus, for example, is bound to attract questioning stares.
Markus H. is a salesman who, due to the nature of his job, spends a lot of time in his car -- an Audi. While personally interested in Toyota's hybrid car, the Prius, he knew that wouldn't jive with the image his company was trying to present.
"You have to bear in mind what your customers might think if you pull up outside their business in a foreign car," he said. "Some of them might think you're not earning enough to be able to afford a quality German car, and that reflects badly on your employer."
The pull of a shiny new Benz or BMW is still strong enough in Germany to have firmly planted itself in the minds of the country's immigrant communities.
Reza, an Iranian who works part-time as a taxi driver, has gotten used to the comfort and road-handling of the Mercedes he drives while on the job. Privately, he doesn't yet own a car, but when asked what he would buy given the choice, he doesn't even have to think about it: "A Mercedes," he says with a smile.
In Germany's Turkish community, it's not uncommon for four or five young men to pool their savings in order to buy a single Mercedes or BMW which they then have to share, rather than to each individually purchase a foreign car they could call their own. But then, Ford Fiestas tend not to turn quite so many heads when cruising the main drag, bass booming, on a Saturday night.