German makes continue surge in U.S. auto market

President Obama made the recovery of the U.S. auto industry a point of national pride when he visited a Ford plant in Chicago last week and said: "We're tired of buying from everybody else."

Americans, however, don't seem at all tired of German-made automobiles. Though Ford and General Motors have shown modestly stronger sales of late, Volkswagen, BMW, and Mercedes-Benz are surging.

The German Association of the Automotive Industry announced on Monday that total sales in the United States of all German-made cars was 252,000 in the first seven months of 2010 - a whopping 86 percent increase year-over-year. In the United States, German models were up 13.3 percent in July, compared with the previous month. The monthly increase nationally for all makes of automobiles was just 5.6 percent.

Interestingly, the higher-priced, super-luxurious models such as the Mercedes S-Class, Porsche 911, and BMW 7er series are selling well in a challenging U.S. economy.

"We've been having a very good year," said Dennis Kelly, sales manager of Thompson BMW in Doylestown. "When times get tough, it seems like people reach out for values. I guess that's part of the success for German cars."

"You get the best technology for a good value," said Tony Fiadino, general manager of Mercedes-Benz of Wilmington. "When it comes to technology and safety, Mercedes-Benz has never been better. Once you have one, you stick to the brand," he said.

Even U.S. car dealers concede that the German makes have advantages.

"The brand loyalty for high-line German car models is certainly strong," said Larry Ferrill, general sales manager of Pacifico Ford on Essington Avenue in Philadelphia. "We are talking about different income and buyer classes.

"But people are generally back to spending. And we are on the rise, too."

Auto experts in Germany pay great attention to the U.S. demand for German-built cars.

"It seems that German engineering has a solid place in U.S. customers' heads," said Ferdinand Dudenhoeffer, a professor at the Automotive Research Center of the University of Duisburg in western Germany. "Right now, U.S. customers are pulling German carmakers out of the crisis."

The Mercedes E-Class is selling briskly in U.S. showrooms. This country is also the largest market, larger than Germany and China, for the C-Class sedan, accounting for 25 percent of total sales. Mercedes-Benz has handed keys to 121,000 vehicles to U.S. customers this year, representing an increase of 20 percent compared to the same period in 2009.

BMW posted an increase of better than 12 percent in July sales. The Munich company said last week it would hire 1,000 workers in Germany for research and development, purchasing, and sales. Porsche, now a business unit of Volkswagen, delivered 75 percent more vehicles to U.S. customers in July compared to July 2009.

"The advantage of German cars compared to the U.S models is their lasting value," Kelly said. "The value of American cars drops 30 percent in the first year, Germans only 10."

Germany, the world's No. 2 exporter after China, relies on its car industry as an essential component in its economic recovery. One in six jobs in Germany is directly or indirectly related to the auto industry.

Yet German auto manufacturers are under pressure. Chinese, Korean, and Indian car companies are fighting for an edge by developing new technologies, such as engines and batteries for electric-powered autos.

A huge transformation looms. German companies are opening plants worldwide in a cost-cutting measure while trying to balance an at-home manufacturing base. Daimler, for example, has 60 percent of its workforce at home, even as it sells three-quarters of its cars abroad.

Such heavy reliance on exports worries some in Germany. "If the U.S. customer quits buying German cars, the German industry as a whole has a problem," Dudenhoeffer said.

For now, that doesn't seem a likely problem.