10mo ago

Once the envy of the world, Germany's car brands now weigh heavily on its struggling economy

www.cnbc.com

Germany’s car industry was once recognized around the world for its high-quality, innovative internal combustion engine cars. But things have changed since then.
The industry is facing a range of issues, from regulation to macroeconomics, China and EVs.
Issues in the automotive sector may also have spill over effects onto the wider German economy, which has been struggling for some time now.

47 comments

Stop innovating and you die. Nothing to see here.
- The last innovation I heard about from BMW was subscription based heated seats.
  
  I heard the steering wheel is also subscription
- I don't even think it's a question of innovation, more just perceived reliability. A large part of the reason Mercedes and other German brands were considered high quality was that they were more reliable than a lot of other brands on the market, while being good to drive. That isn't really the case anymore, and Toyota and Honda have that basically cornered that market to the point that it's an outlier to fine one that isn't reliable.
  
  A large part of the reason Mercedes and other German brands were considered high quality was that they were more reliable than a lot of other brands on the market, while being good to drive.
  "Good to drive" is a bit of an understatement. German cars have enjoyed car enthusiasts' favor for decades, despite often mediocre reliability, specifically because they were great to drive. There are multiple dimensions to that, ranging from the safety advantage (and fun) afforded by giving the driver a good feel for what's going on between the tires and the road surface, to an excellent balance of responsiveness and comfort from well-designed suspension. VW even ran an ad campaign around it: Fahrvergnügen
  Japanese and American cars generally could not compete in this area.
  However, those same German cars also became famous for developing endless little problems over the course of ownership, from annoying rattles to failing parts that were either expensive to buy or difficult to reach (and therefore expensive to replace).
  If there was a time when German cars were known for above average reliability, I think it must have preceded the more recent generations. Maybe back before Japan had started investing in this area?
  
  Yeah - I never would buy a German car again in my life. Had a VW Jetta that died at only 130k miles. I’ve watched friends with BMWs get stuck with $4k repair bills with only 40k miles. The only reason they sell these days is because of this perception that they’re “luxurious.”
  
  Mercedes and BMW were never known for reliability. They were known for combining luxury and a great driving experience, which couldn't be had from any other car company, even Porsche (which was only about driving not luxury until recently) or Cadillac (only luxury and not driving until recently). German engineering has been famous for poor reliability since at least the early 80s.
  
  As a (multiple) Toyota owner for 25 years, I can attest to their quality, nothing has ever… ever, failed on me, and I still see my old 2003 Corolla on the road (friend)
- No, it's stop innovating, build a monopoly, never change. The automotive industry (in Germany and the US) is just blue collar wall st. : too big to fail.
  Stop talking "free markets" when the competition is taxed at 40%
Maybe selling parts of your car as subscriptions isn't a good idea. I've only read that Mercedes and BMW are doing it.
- You forgot Toyota
  
  Isn't Tesla doing it too?
  
  Toyota is also doing this??? I hope they sink completely too
They're merely raking in slightly less massive profits compared to last year. They could probably make up for it by simply not paying out massive bonuses for higher ups, but we all know they'll cut jobs instead unless they get that sweet tax payer money. Greedy scumbags.
Living in LA, you'd think BMW was doing great. There's an obnoxious asshole in one, endangering the lives of everyone around, everywhere you go!
- In Switzerland, Audi is the rich arsehole car. Where I live, they tend to have Geneva plates
  
  I see rich arsehole cars daily. Audi, Lamborghin, Ferarri, Bentley, Rolls Royce, Porche, etc. But 9 times out of 10, when I roll my eyes about someone driving like a piece of shit, or annoyed by their obnoxious exhaust, it's a BMW
  
  That's also the case here in the Netherlands though BMW is still up there as an asshole car. Surprisingly, I have a hunch that the next one to join this club is going to be Volvo around here, they're €€€ and I keep seeing them behaving just like the BMWs/Audi's.
These German carmakers can buy a monthly subscription to me giving a fuck.
So, to condense the article:

Opinion:
- ...with our expensive EVs...
  They can't compete on price primarily.
  
  They wanted to keep the juicy margins of SUVs whilst being forced (whist bitching and moaning all the way) to transition to EV technology, so ended up pushing EV SUVs.
  Their EVs are expensive mainly because of them targeting higher market segments instead of making an "EV for the people", all the while that was exactly what most Chinese car-makers were aiming for.
  
  German cars never completed on price at all. They compete on quality. They can compete on quality again.
  
  Sure, no objections there
- Won't somebody please think about the car manufacturers?!?
Did not read the article, but when you sell cars that have full functionality but put the actual functions behind a paywall, this is what I'd expect.
Compete on quality, not price.
- I don't think the German car industry has ever competed solely on price. Outside Germany and some European countries, German brands are luxury items. In Germany, they oscillate between bread-and-butter and above-average.
  The problem is value-for-money and market fit. German car makers (used to) have the best margins in the most expensive products, luxury items sold outside of Germany. Those cars aren't built to last (like a Japanese car) nor are they fancy (like the first Tesla model).
  German ICE cars are (and have always been) less reliable than Japenese cars. And more expensive. And come with very basic interior design / electronics unless you go for the luxury option.
  AND NO EVs.
  Who buys German cars? Show me one person who wants a VW.
  signed, a German engineer
  
  Went from an Audi to Merc. I will likely go Japanese next but both cars were really nice I just dont think they are worth the price. I would go back to audi but they have moved to a subscription model for features so I will likely go to lexus or just a standard brand out of Japan. Definitely not American.
Didn't the Volkswagen get super popular in part because it was cheap in a bad economy? It wasn't solely because of Hitler endorsing them, right?
- Right. It's the "People's car". The strategy was in the name.
I read this a few days ago about BMWs having plastic engines now. I plan to avoid.
- To be clear to those just reading your comment without clicking through to your reference, the engine is not plastic. The block is still metal, as are the internal parts, but there are a lot of plastic bits all over joining things together (cheaper and perhaps planned obsolescence). Too many parts on the engine being plastic obviously makes for reliability issues (as your link describes).
The "great industrial leaders" heading these companies have been protected and mollycoddled by the German State, especially at the time of the Emissions Scandal (were the only person to get convicted was a lowly Engineer), so they interiorised well the "we're too big to fail" message and proceeded to go into full-on extractive mode in the full knowledge that no matter what the German and even European taxpayer will pay for saving their mismanaged and bled dry companies.
The result is entirely what invariably happens in such situations.
Can't help but wonder what has been the impact of the support, e.g through subsidies, for automaker industry both nationally and internationally.
We keep on hearing that it's a huge industry, that it "creates" lots of jobs, that people buy cars from their own country as a form or pride, etc. I bet some of it is true but I also bet the negative impact is not communicated as clearly. Any research on the topic? I imagine it might highlight precisely how the EV transition (which in itself is also problematic due to car usage, battery recycling, etc) has been radically slow down, maybe also public transport usage, CO2 emission, etc. Anyway I'd love to read a paper on the topic.
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