German automakers ready for U.S. downturn
It's no secret that 2008 could be one of the worst years for automakers in the last decade and a half, but German automakers say they are ready to weather the storm. The U.S. market represents about 20% of BMW's, Porsche's and Mercedes-Benz's total sales, but the German automakers are not entirely concerned about a downturn because they have an upscale client base.
Porsche relies on the U.S. for 36% of its global sales, but is still not concerned about a slump in the market. "Especially in the U.S., we have a very solvent clientele," CEO Wendelin Wiedeking has said. "Porsche is prepared for a possible slump."
Although Audi has plans to ramp up its U.S. sales, the U.S. currently accounts for only about 10% of the marques worldwide sales. "We generate 90 percent of our sales outside the U.S., and our growth in those areas is unabated," an Audi spokesperson told Automotive News.
However, higher volume brands such as Volkswagen could feel the crunch since the brand is "closer to the average consumer." Unlike BMW and Mercedes-Benz, VW doesn't have any production facilities in the U.S., although one is on the way.
However, the downturn in the U.S. economy could be the perfect time for foreign automakers to invest more in the U.S. As Albrecht Denninghoff of BHF-Bank put it: "Land is cheap. The dollar is cheap. Real property is cheap."