But the strength of the euro is hurting European car makers in the global market. VW is looking to hedge their currency exposure by building a plant in the US. They're still searching for a site somewhere in the business-friendly (read: union hostile) Southern states.
But Dieter Zetsche thinks it's good exercise.
From the FT:
--Dieter Zetsche, chief executive of Daimler, likens European carmakers’ battles with the strong euro to a session in the gym.
“The currency situation is a permanent training course for us. We always have to keep going and improving and that is keeping us fit.”
But the German car makers are all making more money now, except for BMW, than they were in 2002 when there was a dollar/euro parity.
Maybe he has a point. The currency pressures and competitiveness make them improve their productivity and creativity in delivering desirable products to the marketplace.
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And building a US plant is not a simple solution as the FT story explains.
Part of the reason lies in the fact that production accounts for only a small proportion of a carmaker’s dollar exposure.
BMW estimates it is worth about 10-15 per cent of its exposure whereas purchasing accounts for 60-80 per cent. And here matters are much trickier.
The crisis in the US car industry has led to severe problems for suppliers and the German luxury carmakers have found difficulties in building up a reliable supply base that can provide them with the same quality of components as back home.
“There is a big problem with suppliers over there – many of them are almost dead. That makes a new factory less likely,” says Mr Zetsche.
