German Auto Industry Group Rejects Trump's Talk of Unfair Trade -- Update

By William Boston 

BERLIN -- The German auto industry is pushing back against accusations from U.S. President Donald Trump that automotive trade between the two countries is unfairly tipped in Germany's favor.

Matthias Wissmann, a former German government official who is now president of the German Association of the Automotive Industry, rebutted Mr. Trump's depiction of German-American auto trade and also warned against putting up barriers that would weaken the North American Free Trade Agreement. German auto makers have factories in Mexico that benefit from Nafta.

"Protectionism has never lastingly solved any economic problems in the world," Mr. Wissmann said in a speech Wednesday evening at the group's annual New Year's reception in Berlin. "Should it come to restrictions in the Nafta region, the U.S. economy would be the first to take a considerable hit."

Mr. Wissmann also pointed to the U.K.'s decision to leave the European Union and the EU's single market as a major risk for German auto makers. The U.K. is the largest export market for German car makers, accounting for 800,000 vehicles last year. He called on Brussels to do everything possible to ensure that there is continued free trade in goods and services between the U.K. and the EU.

The German auto industry is vexed by the new U.S. president's combativeness. Mr. Trump recently singled out BMW AG, Daimler AG and Volkswagen AG, threatening to impose a 35% border tax on German automotive products that are shipped to the U.S. from Mexico to force the companies to build more cars north of the border.

Mr. Trump has said that while Daimler's Mercedes-Benz luxury cars are a common sight in U.S. cities, few Chevrolets can be seen on the streets in Germany.

Ford Motor Co. and General Motors Co. once dominated the German auto industry, prompting Adolf Hitler to create Volkswagen as a German mass-market competitor to the U.S. car makers. Today, Ford and GM, through its Opel subsidiary, are still among the largest car makers in Germany and Europe. GM recently stopped selling Chevrolet models in Europe as part of a restructuring, instead focusing on Opel models.

German Transport Minister Alexander Dobrindt, speaking at the event, dismissed Mr. Trump's take on trade and the paucity of Chevrolets on German roads. "That's the economy," he said, eliciting applause. "That's industry. That's competition. And that's what we want, ladies and gentlemen."

Mr. Wissmann said the balance of automotive trade was only part of the picture. GM and Ford have manufactured in Germany for decades and their share of the German auto market is in the double digits, he said. By comparison, German auto makers combined held a 7.6% share of the U.S. light-vehicle market last year, down from 8% in 2015.

The U.S. is the second-largest export market for German auto makers, Mr. Wissmann said. But he added that German auto companies and their suppliers have greatly expanded production in the U.S. over the past few years and export more than half of their U.S.-made vehicles, including to Europe.

Mr. Wissmann said German manufacturers had increased their U.S. automotive output fourfold over the past seven years to 850,000 vehicles in 2016. German car makers and suppliers directly employ 110,000 people in the U.S., he said.

"German manufacturers have significantly increased the number of their factories in the U.S.," Mr. Wissmann said. "This shows clear commitment to the U.S. as a manufacturing location."

Write to William Boston at [e-mail]

(END) Dow Jones Newswires

January 25, 2017 15:04 ET (20:04 GMT)

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