Mr. M
Tire Trailblazer
Germany's car industry
The big-car problem
Feb 22nd 2007 | FRANKFURT
From The Economist print edition
Germany produces some of the fastest and most luxurious cars in the world, but is that yesterday's game?
EARLIER this month Germany's carmakers were hit by new emission limits proposed by the European Commission. There were howls of protest, not least from Angela Merkel, the German chancellor. So the proposed ceiling was raised a little, to 130 grams of CO2 per kilometre to be met by 2012. This still left the makers of many of the world's most prestigious cars with the most work: in the European Union only six German-made models meet the target, but 34 of those made by competitors do. Moreover, of all the cars on sale in Germany which pump out more than 200g of CO2 per kilometre, most are German.
This is not a happy state of affairs for a country that likes to lead the way on the environment. Nor does it bode well for Germany's biggest industry, which employs one in seven of the country's manufacturing workforce. Germany's carmakers should benefit from spreading their escalating costs of research and development across a greater volume of vehicles. But attempts to drive into mass markets have failed, with BMW's disastrous takeover of Britain's Rover Group and DaimlerChrysler's marriage now facing divorce.
For the time being, life still looks rosy. Volkswagen this week announced a 52% increase in operating profits for 2006. Mercedes, the car division of DaimlerChrysler, has bounced back from a couple of bad years. Sales of Porsches and BMWs seem almost insensitive to the price of petrol. The German stockmarket barely flinched at the new CO2 standards.
Yet Germany's carmakers are less well-placed for the future than are other European producers, let alone the Japanese. German cars may well continue to dominate the performance parts of the luxury market—after all they are crammed with state-of-the-art technology. But buyers' tastes are changing and they have increasing qualms about the environment. This shift in the market is what has hit Chrysler's sales in America, because it is highly dependent on fuel-thirsty sport-utility vehicles (SUVs) and pick-up trucks.
Read the rest of the article here: http://www.economist.com/business/displaystory.cfm?story_id=8738865
The big-car problem
Feb 22nd 2007 | FRANKFURT
From The Economist print edition
Germany produces some of the fastest and most luxurious cars in the world, but is that yesterday's game?
EARLIER this month Germany's carmakers were hit by new emission limits proposed by the European Commission. There were howls of protest, not least from Angela Merkel, the German chancellor. So the proposed ceiling was raised a little, to 130 grams of CO2 per kilometre to be met by 2012. This still left the makers of many of the world's most prestigious cars with the most work: in the European Union only six German-made models meet the target, but 34 of those made by competitors do. Moreover, of all the cars on sale in Germany which pump out more than 200g of CO2 per kilometre, most are German.
This is not a happy state of affairs for a country that likes to lead the way on the environment. Nor does it bode well for Germany's biggest industry, which employs one in seven of the country's manufacturing workforce. Germany's carmakers should benefit from spreading their escalating costs of research and development across a greater volume of vehicles. But attempts to drive into mass markets have failed, with BMW's disastrous takeover of Britain's Rover Group and DaimlerChrysler's marriage now facing divorce.
For the time being, life still looks rosy. Volkswagen this week announced a 52% increase in operating profits for 2006. Mercedes, the car division of DaimlerChrysler, has bounced back from a couple of bad years. Sales of Porsches and BMWs seem almost insensitive to the price of petrol. The German stockmarket barely flinched at the new CO2 standards.
Yet Germany's carmakers are less well-placed for the future than are other European producers, let alone the Japanese. German cars may well continue to dominate the performance parts of the luxury market—after all they are crammed with state-of-the-art technology. But buyers' tastes are changing and they have increasing qualms about the environment. This shift in the market is what has hit Chrysler's sales in America, because it is highly dependent on fuel-thirsty sport-utility vehicles (SUVs) and pick-up trucks.
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Read the rest of the article here: http://www.economist.com/business/displaystory.cfm?story_id=8738865
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