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COMMENT: German automobile industry will need to make a decision

COMMENT
Franz W. Rother is Editor-in-Chief of Automobilwoche

FORMER GERMAN CHANCELLOR HELMUT SCHMIDT is worried about the industrial future of his country.

The retired politician said recently in an interview that there is hardly any industry sector where German companies stand out for their special achievements.

Within the medical sector and airplane production, he said, Germany is at best on par with other industrial countries -- with support from its European partners. He also said he believes the German car industry will soon be finished.

At the same time, Bob Lutz, vice chairman at General Motors, the world's largest automobile manufacturer, said he no longer is afraid of German brands. What worries him now are Japanese manufacturers.

One of the critics is 86 years old, the other 74. However, one simply cannot ignore the comments just because of their age. Their opinions are similar to that of the German general public. The success of French, Japanese and Korean brands in the German market isn't only due to the competitors' aggressive pricing. German car manufacturers have seen problems with electronic engineering and quality, recall campaigns and unsuccessful model launches over the past few years erode their once-deserved splendor.

On top of that, an increasing number of cars and components, though engineered in Germany, are manufactured in low wage countries across the border. It is said that automobile manufacturers and their suppliers have no choice because globalization increases both competition and pricing pressure.

Corporations announce almost daily the moving of production processes to foreign countries. Germany is one of the world's largest exporters of both cars and jobs.

Meanwhile, German loyalty to domestic brands diminishes with every job that is moved abroad.

BMW and Porsche recognized the situation and built their new manufacturing plants in East Germany. This was only partially a patriotic move. Marketing was the real reason. Only those who produce in Germany can market the German art of engineering in a credible way, and then charge their worldwide customers a premium.

Others do no more than design a blue-print in Germany. Production takes place elsewhere.

What they do when they sell their vehicles is improper labeling, and they should expect to be punished for it by their customers.

If this becomes a general custom then the German auto industry indeed has no future.

Nonetheless, the industry won't be finished for some time yet.

Lutz, a member of the Opel supervisory board, should know it.

Tags: Automakers

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