Emissions Scandal, Suspected Cartels, Bans – German Automotive Industry in Disrepute: What Next for Germany as a Business Location?

The German automotive industry is currently getting some pretty bad press. The accusations range from manipulation in the emissions figures of diesel vehicles to suspected cartel agreements. The automotive industry, which lies at the very heart of the German economy, is becoming its new problem child. How can the industry regain this lost trust? Christian Rammer, the Centre for European Economic Research (ZEW), Mannheim, cites the reasons for German politicians’ “well-meaning regard” for German automotive manufacturers; and highlights the branch’s major economic importance. Around 5% of all jobs in Germany are directly or indirectly linked to the production of vehicles. German politicians have decided to protect Germany as an automotive production location as far as possible. There is, however, a big question mark over whether this benevolence will continue to prevail. According to Jochen Flasbarth, German Federal Minister for the Environment, Nature Conservation, Construction and Nuclear Safety, the emissions scandal has fostered mistrust of diesel, but also of the automotive industry as a whole. In view of developments in recent years, the close relationships between politics and business should also be called into question. To restore the automotive industry’s credibility the state would have to supervise the industry more closely than it has done in the past. Heinz Rudolf Meißner, formerly of the International Institute of Economics and Law, Berlin, believes that an active industry policy is the only way to ensure the sustainability of the German automotive industry. Sustainable concepts also need to move beyond the “narrow view of the car” and should focus on integrative approaches for mobility concepts, whereby privately-owned cars are just one of a range of options. Helmut Becker, Institute for Economic Analysis and Communication (IWK), Munich, warns against introducing an E-car quota in Europe. In his opinion, this would involve manufacturers producing vehicles that they wouldn’t otherwise be able to sell on the free market. This would create irresolvable economic problems for the German automotive industry, and especially for Germany as a “car country”. Ferdinand Dudenhöffer, University of Duisburg-Essen, identifies the causes of “the biggest scandal in Germany’s car industry” as a combination of false political price signals, a lack of distance between government policy and the car industry’s interests, as well as a lack of ethical conduct in engineering departments and on executive boards. According to Jörg Hofmann, IG Metall, both industry and politicians need to help build a strong future for the German car industry in equal measure. Binding rules on protecting consumers and electro-mobility value creation chains in Germany are indispensable.