America's automakers hit rock bottom with the public when their executives went to Washington in 2008 to beg for a bailout -- in corporate jets.Now it's the German car industry's turn to suffer an image crisis and, as with General Motors and Chrysler a decade ago, it could not be happening at a less auspicious moment.
Amid trade wars and plunging China sales, the number of cars rolling off Germany's production lines has dropped by 12 percent this year and exports by 14 percent.Sales in Europe's No. 1 market fell 0.8 percent in August. Overall European sales fell 9 percent in the same period.With demand expected to remain weak for a couple of years, the German supplier Continental is not ruling out cuts to working hours and jobs.It's a bad time to be having a public relations crisis too, but that is what is happening in the country that invented the internal combustion engine.This month's Frankfurt auto show was meant to give Germany's mighty auto industry a platform to show off its expensive plans to build more electric vehicles.
A global race is underway to digitize cars, and the perception is that the newcomers with a disruptive mentality have taken pole position.READ MOREInstead, many international automakers chose to stay away (some to save money) and Karl-Thomas Neumann, the ex-boss of Opel/Vauxhall, declared the event a "huge fail."Compounding the misery, Mercedes-Benz, BMW and Volkswagen Group were upstaged by climate protesters who accused them of not doing enough to end their addiction to diesel and gasoline engines.Things had already got off to an ugly start. On the eve of the show four pedestrians were struck and killed by an SUV in Berlin, prompting a fierce debate about the "social utility" of these gas-guzzling, tank-like cars
Meanwhile, the organization that one might usually expect to defend the German car giants -- the VDA lobby group -- was preoccupied with the abrupt resignation of its president, Bernhard Mattes. This fueled speculation that the industry was unhappy about its loss of political influence and increasing stigmatization.The German car industry provides more than 800,000 jobs in the country and it accounts for a big chunk of its manufacturing production and exports.
Past governments fought hard to protect their industry crown jewel from troublesome regulations. That is no longer always the case.First, the Volkswagen diesel-emissions scandal made it unwise for politicians to go easy on companies that put profits above public health. And second, Germans have become alarmed by climate change and the industry's role in that.The average emissions of new vehicles sold climbed for the second year in a row last year, in part because of SUV sales. That is one reason why Germany is set to miss its 2020 carbon pollution reduction targets. Passenger cars account for about 11 percent of its greenhouse gas emissions.Stringent European Union emission targets, and massive fines for non-compliance, have been put in place already.
A German federal government led by the Greens (not unimaginable given the party's poll surge) would be tougher still. After the deadly accident in Berlin, there were calls to ban SUVs from cities.The average age of a new car buyer in Germany has climbed to 53, suggesting that the industry may be looking at a difficult future.Yet claims that Germans have fallen out of love with the automobile feel overblown. They still bought about 3.4 million new vehicles last year, pretty decent by historic standards. About 95 percent of them had a combustion engine. More than one-quarter were SUVs.Nor does the government have any desire to kill its golden goose.Earlier this year officials rejected attempts by campaigners to mandate a speed limit on the autobahn.With this contradiction between the public's anxiety about climate change and its fondness for big vehicles, it's not surprising that the government and automakers are struggling to keep everyone happy. Riding a bike and car-sharing have become a genuine alternative in cities such as Berlin.
But for those who still feel they need a car, electric vehicles tend to be more expensive and their driving range can be limited (for now, at least). The climate package the German government is due to announce on Friday will doubtless try to address this by including more incentives for electric vehicles and infrastructure.As the industry wrestles with such epochal challenges, it helps that Germany's automakers have all recently appointed new bosses.
They are far from united, however, on how aggressively to abandon the combustion engine.Volkswagen is going "all-in" on battery cars (it's targeting 40 percent of electric sales by 2030), while BMW is more cautious.
The latter thinks hydrogen fuel-cells might have a future, ( They are wrong and will cost them dearly in the future !!!! ) though VW is not a fan ( VW sensible they are going in the right direction )
.Yet even VW plans to use the profit from selling large SUVs such as its three-row "Atlas" to fund investments in green alternatives.At last week's show in Frankfurt, electric vehicles like the Porsche Taycan and Volkswagen ID3 sat alongside gas-guzzling vehicles like the BMW X6 and Mercedes AMG GLE Coupe.With the climate crisis intensifying, the industry's split personality is getting more incongruous and indefensible by the day.
Exciting times ahead
Think my kids in the future will only be driving Electric Cars
