Automakers

New in the driver's seat

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The leaders of the Greens may prefer for people to walk more, drive less. Source: Reuters

The auto industry is much closer to the government in Germany than in most other countries. For one thing, the state government of Lower Saxony is the second largest shareholder in Volkswagen, the world’s largest carmaker last year, and sits on the company’s board of directors. Even in other states, car companies have a lot of clout because of their major contributions to the booming German economy.

But the auto industry fears that may be changing as a result of the elections held last Sunday, which are likely to bring about a reshuffle in cabinet seats and perhaps environmental policy as well. The current consensus is that Chancellor Angela Merkel will likely form a three-way coalition with the business-friendly Free Democratic Party and the pro-environment Greens.

It is the presence of the Greens in the cabinet that worries the automakers the most. The party has demanded an end to production of cars with combustion engines as early as 2030. “For the government to express a preference for a type of engine is nonsense,” said an industry spokesman, who asked not to be identified. “It’s by selling combustion engines that we will earn the funds to pay for the industry’s conversion to electric cars.”

The Greens have demanded an end to production of cars with combustion engines as early as 2030.

Ms. Merkel reassured automakers during an appearance at the Frankfurt International Auto Show this month that her government would not set any deadlines for the end of combustion engines, as Britain did by announcing a 2040 cutoff. But she also urged them to move faster on the conversion to non-polluting electric cars.

One of the staunchest supporters of combustion engines in the ruling coalition has been the Christian Social Union of Bavaria, home to both BMW and Audi. But the party fared poorly in the election and is likely to lose some cabinet seats and influence over policy.

Another major concern for the industry is how the government handles the ballooning scandal about diesel emissions. Volkswagen has admitted that its diesel emissions control system was fitted with an illegal defeat device so that diesel cars would pass emissions tests but produce much more nitrogen oxide fumes once on the road. Other carmakers have not admitted to such trickery, but they have agreed to recall diesel cars to retrofit them with better emission control software.

So far the government has had a relatively mild response to the diesel issue, compared with the United States, which fined VW $16 billion and and sent at least one VW official to prison. But that soft approach may now change with the departure of Transport Minister Alexander Dobrint, who is part of the CSU leadership. In addition, Barbara Hendricks, the country’s environment minister, is in the Social Democratic Party, which is leaving the government coalition.

The government has scheduled a second “diesel summit” with carmakers to discuss what can done done about diesel pollution. One solution that was suggested and quickly rejected was to give diesel cars blue license plates and then ban those cars from city centers on days when pollution exceeds legal limits. That suggestion may now be revived.

There have been reports that Merkel’s government has offered the blue license plate, which is tantamount to a diesel driving ban, to the Greens as a sop in return for Green support of the government’s plans to toughen up immigration rules. Ms. Merkel has been talking tough on immigration since the election allowed an anti-immigration party to win seats in the parliament.

A Green transport minister also may be less likely to give the carmakers an easy ride on the diesel issue, especially since prosecutors in Munich confirmed Thursday that they have arrested a second Audi executive in the emissions cheating case after searching Audi officials’ homes.

Voters are already up in arms because the resale value of diesel cars has plummeted as the emission scandal has mushroomed. The Greens may decide that a get-tough policy on diesel is what the country needs, even if it is opposed by the industry itself.

Markus Fasse is a correspondent in Munich, Daniel Delhaes reports on politics, transport and airlines from Handelsblatt’s Berlin office. and Stefan Menzel is one of Handelsblatt’s leading automotive reporters. Charles Wallace adapted this story for Handelsblatt Global. To contact the authors: fasse@handelsblatt.com, delhaes@handelsblatt.com, menzel@handelsblatt.com

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