Networked cars

Navigating the Crisis

The car of the future. Source: IAA action press
The car of the future.
  • Why it matters

    Why it matters

    If German car makers do not adapt to new technology fast, they will not survive.

  • Facts

    Facts

    • The IAA Motorshow begins in Frankfurt on Thursday.
    • The main topic of discussion is the networked car.
    • The car industry has long defied doom sayers.
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  • Audio

    Audio

  • Pdf

Welcome to the 2029 IAA international motor show in Frankfurt. The topic on everyone’s lips is the planned German Car Union. For months, Volkswagen and BMW have been desperately negotiating a merger that they need to surive. The German government is mediating talks. The states of Lower Saxony and Bavaria both plan to support their restructuring with financial guarantees. The likewise struggling Daimler Group is withdrawing from the alliance under pressure from its Chinese majority shareholders. The Sino-Swabians want to tender themselves as premium partner to the U.S. mobility group Uber, which is already serving its customers with 70 million self-driving cars.

Is this too bleak a future? It seems so. Anybody who visits the IAA in Frankfurt these days will see an industry bursting with strength. The car companies have never been larger and the profits fatter than they have been in the in the last couple of years. The car industry recovered from the crisis of 2010 in a way no one would have dreamed possible. The boom in China, the low price of oil, and the weak euro have fueled a business model whose end had long been prophesied. Things have turned out differently. The show doesn’t belong to the electric car, but to the SUV.

But the glittering façade is crumbling. The boom in China, which was able to hide all the weakness of the past years, is over. Not only are overcapacity and price wars threatening in the Far East, new competitors are emerging. The Chinese car industry has learned its lesson and is offering inexpensive compact cars and is cutting into VW, Ford and GM market shares. But the Great Wall Motors and the state-owned Jianghuai Motor Company are not satisfied with just that. They are planning on penetrating the home markets of the established brands through South America and Eastern Europe. The battle for the private customer, who never has or wants to spend much money on a car, will become much more competitive.

 

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