Merkel holds talks with German car-makers on cushioning crisis impact

Chancellor Angela Merkel held talks on Tuesday with Germany's automotive industry on how to cushion the worst effects of the Covid-19 pandemic that halted production for weeks and has triggered a steep slump in vehicle sales.

Germany’s car industry is the heart of Europe’s largest economy, but in the last week the industry has gone into cardiac arrest. That in turn has triggered further shocks among hundreds of companies who work to supply the automotive industry.

The VDA automotive lobby group says its members’ sales were down 50 per cent in March across Europe – with worse to come for April.

German car companies VW, BMW and Daimler sent home many of their 860,000 employees on so-called short-time work. Now, as car dealers reopen for business, the industry hopes sweeteners will encourage customers on to the forecourts.

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And the industry that earned €426 billion in 2018, and generates a third of Germany’s total tax income, believes it has a strong hand.

“This is not about special treatment for car-makers. It’s about Germany’s real core industry that can send far-reaching impulses not just in Germany but in Europe,” said Ms Hildegard Müller, VDA president.

Subsidy

The influential car lobby – backed by car-making states like Bavaria and Lower Saxony – wants the existing €6,000 subsidy for buying a hybrid or electric car to be increased to €10,000 and extended to all car types.

Tuesday’s preliminary discussion yielded no firm measures, but has attracted vocal protest.

Some critics argue the sales slump will reverse now that car showrooms have reopened. Others are critical of car companies asking for state handouts while continuing to pay shareholder dividends. Last year VW alone earned around €20 billion, the highest profit in the company’s history.

Consumer groups say the diesel fraud at VW and other companies disqualifies the industry from state aid.

Meanwhile, Fridays for Future campaigners oppose state subsidies for petrol and diesel engines, which the climate change campaigners call “yesterday’s technology”.

On Tuesday a “mobility alliance” gathered in front of the German chancellery. It wants the federal government to back a broader stimulus package than a reheated scrappage scheme, as agreed a decade ago in the financial and euro crises.

It has urged the German federal government not to confuse mobility with “car, car, car”, and to channel pandemic-forced change into a green mobility revolution.

Public transport

Instead of car-only bonuses, the mobility alliance wants Berlin to subsidise the purchase of e-bikes or annual public transport tickets.

The mobility alliance includes a public transport lobby group, consumer agencies, rental bike companies and is headed by Germany’s cycling lobby group ADFC.

“We don’t want that the government dictates the choice of transport but makes all options possible,” said Mr Burkhard Stork, ADFC head. “This is now a huge chance for the federal government to get Germany enthused for an intelligent traffic mix.”