46 ms·

Germany's car industry faces a perfect storm

108 points by lawrenceyan 8y ago

RickJWagner 8y ago
I don't like how the subtitle reads "American tariffs, a Chinese slowdown..." but the article text says "possible US tariffs". It seems misleading to lead with 'tariffs' when they are only 'possible tariffs'. Makes it seem click-baity.
- sremani 8y ago
  1. Auto industry is so vested in China market for their growth, because of US - China trade war that growth opportunity is more or less gone for at least now 2. US is a mature but substantial auto market, with possible tariffs (highly likely since EU and US are not even seriously talking trade) will pull the rug from the under. 3. Debt in developing markets is high, there are only handful of places where there can be some growth but do not have size and heft of US or China markets
- sintaxi 8y ago
  I agree, and further to your point America has made it clear they only intend to apply tariffs that mirror what is applied to America.
- matt4077 8y ago
  When you're "facing" a storm, it is one visible on the horizon. The term implies forward-looking (and therefore uncertain) predictions. Subheads also work rather bad as click-bait, considering you only get to read them after clicking the link.
- desdiv 8y ago
  "American tariffs" refers to the tariffs raised by President Donald J Trump against _China_ on March 22, 2018. This and the ensuring Chinese retaliatory tariffs has already taken effect for almost a year now and has already cost German car makers dearly: >China’s 40 percent retaliatory tariffs on US car imports has already cost the Bavarian company €300 million ($340 million). ===================================== "Possible US tariffs" refers to tariffs on imported cars and parts being considered against _all countries_[0]. These tariffs are separate and in addition to the Chinese tariffs. >U.S. Commerce Department recommendations into whether Trump should impose tariffs of up to 25 percent on imported cars and parts on national security grounds are due by mid-February. [0] https://www.reuters.com/article/us-autos-trade/trump-inclined-to-impose-new-u-s-auto-tariffs-senator-idUSKCN1PA31S https://www.reuters.com/article/us-autos-trade/trump-incline...
clouddrover 8y ago
Perfect storms aside, I think Volkswagen will be the biggest producer of EVs within 3 years. They're targeting the high end with the Porsche Taycan, the Porsche Macan EV, and the future Audi e-tron GT which will be based on the Taycan's platform: https://www.cnet.com/roadshow/news/porsche-double-taycan-ev-production-demand/ https://www.cnet.com/roadshow/news/porsche-double-taycan-ev-... https://www.cnet.com/roadshow/news/porsche-macan-electric-only-official/ https://www.cnet.com/roadshow/news/porsche-macan-electric-on... Volkswagen's MEB platform targets mid-range vehicles and will be used for models across the VW, Audi, Skoda, and SEAT brands: https://en.wikipedia.org/wiki/Volkswagen_Group_MEB_platform https://en.wikipedia.org/wiki/Volkswagen_Group_MEB_platform https://jalopnik.com/the-fascinating-engineering-behind-vws-electric-car-pla-1829257860 https://jalopnik.com/the-fascinating-engineering-behind-vws-... And Volkswagen is looking to license the MEB platform to other manufacturers: https://jalopnik.com/volkswagen-wants-other-automakers-to-use-its-meb-electr-1832269531 https://jalopnik.com/volkswagen-wants-other-automakers-to-us... Ford will probably license the MEB platform for their EVs.
- lazyjones 8y ago
  > Perfect storms aside, I think Volkswagen will be the biggest producer of EVs within 3 years. What makes you think they stand a chance against Chinese manufacturers who face huge demand in their home market (whereas in Germany, EV are still looked down upon)? It looks like 60% of global PEV sales in 2019 will be in China - just look at all these models and manufacturers: https://cleantechnica.com/2019/02/24/china-electric-vehicle-sales-jump-175-up-to-4-8-of-auto-market-in-january/ https://cleantechnica.com/2019/02/24/china-electric-vehicle-...
  - clouddrover 8y ago
    Because the world car market is bigger than just China, because Volkswagen is the world's second biggest car company, and because VW is big enough to spend its way out of trouble (which is what it's doing now).
    - lazyjones 8y ago
l4u532 8y ago
As a German, I am quite happy about this. What you must know is that German organisations are extremely hierarchical, with little information flowing from frontline management to to top management. Hence, change only happens top down and only if the top managers in their ivory towers deem it necessary. But it’s incredibly important that our automakers reinvent themselves. And here we have the necessary angst to drive this long-needed transformation of our automotive sector.
- ahartmetz 8y ago
  Not all German organizations are like that. The car industry is especially dysfunctional. I've been watching them fail at software for years now. The problem, as far as I can tell, is as follows: top management is able and motivated to increase the size of the money bag. Developers just want to do a good job for a good salary. Middle management can't change the size of the money bag too much, so it just wants to grab as much as possible for itself. How does a middle manager expand their empire? Certainly not by leading a small, effective organization. The head count needs to grow, so the middle manager wants ineffective developers. It only works because no one above knows enough about software to fairly evaluate the work of these petty empire-builders. One time I wanted to gauge how far the car industry has come from realizing the problem to implementing a solution, so I typed something like "automotive software crisis" into Google. Among the first few hits a presentation of a German CS professor stating that there is a crisis... and that the solution is model-driven development. It's the exact shit that they are already doing that is not working. If good software is produced in Germany, it's despite subpar academic CS and dysfunctional large companies. Much of Germany's economy is medium-sized companies - fortunately, I guess. I do expect the German car industry to fix its software but only when it's really suffering financially. Car industry outsiders will be heavily involved in the solution.
  - adrianN 8y ago
    Academic CS in Germany is world-class.
    - ahartmetz 8y ago
andreagrandi 8y ago
"The German industry was hit by slump in sales in the third and fourth quarters of last year" Oh really? I asked the shipping time for a Polo (2017 model) and I've been told 160-180 days. I'm not surprised if they don't sell many cars.
- Tade0 8y ago
  My friend got "up to 270 days" on a Skoda Superb. The wait for a very specifically optioned Prius in my country, in which barely several hundred of these vehicles are moved annually, is at most four months from commission to getting the keys.
Haga 8y ago
A company can not invent away from theire main field - in this case combustion engines. Every time the weather changes some of those in Old power will backstab the internal upstarts.
- _the_inflator 8y ago
  It is about mobility. Why limit yourself to cars? Why not offer e scooters, bikes? The whole concept of owning a car is wrong. With German cities becoming more and more like megacities, it is important to focus on mobility and not on selling cars.
  - Haga 8y ago
    It's the linear mindset that's the main problem. None of these guys would even dare the gaben bezos dream of becoming the market. There is no open appstore in any of these cars.
sonnyblarney 8y ago
VW is trying to reconstitutes their entire fleet onto a 'single platform' or at least something resembling that. This is a core part of their long term strategy that's oft not talked about [1] [1] https://en.wikipedia.org/wiki/Volkswagen_Group_MLB_platform https://en.wikipedia.org/wiki/Volkswagen_Group_MLB_platform
edem 8y ago
About time. I had the "luck" of working for multiple German companies (including Volkswagen) and I'm surprised how these behemoths still function. As a grunt programmer, it was painful to see how the upper management made decisions based on politics which made no technological sense whatsoever. In my years of working for German companies I saw multiple project reboots, millions of $s thrown out of the window on failed projects and the worst thing is that there is literally no flow of information from bottom to top. No matter how smart you are if someone is above you in the hierarchy you are nothing, no one. I hope they will fail spectacularly and learn this hard lesson finally.
- iagovar 8y ago
  They won't learn. I work for another euro behemoth and it's exactly the situation you describe. As long as they pay me and support my lifestyle I have no problem, but Im already tired of trying to fight the nonsense. Sadly Im not a programmer so finding other companies with the same conditions is hard.
  - edem 8y ago
    I'd really like to be able to just sit and do the work and don't care about these things (I'm not talking about you but the ability in general). I just can't help myself. I'm always trying to fix things but with a company like this it feels like as if I was trying to climb the Mount Everest.
    - iagovar 8y ago
      Well, I got to a point that I had to decide. If I hop to another job I'll work more hours, for less money, and I won't be able to stay here, which is nice because I have both my job and the beach on a 5 minutes distance walk.
  - lnsru 8y ago
    Exact my situation. Working for a company with roots in Siemens. The culture is terrible, must fight the nonsense to get some meaningful task. Getting insane money for doing nothing, loosing skills every month, mental health suffers, but family depends on my income. Finding other companies in Germany with similar conditions is hard, looking now in Switzerland.
superkuh 8y ago
This website attempts to tell me that javascript is required but it's not. They just want users to execute arbitrary third party code. Turning off CSS allows access to the full article text.
Phenomenit 8y ago
Is it even possible for the these behemoths to exist when the demand for cars is decreasing and alternatives are exploding with the advent of batteries and electric motors powering every mode of transportation from bicycle(I love my Ebike) to skateboards? And is it possible for the suppliers to survive when you have so many fever moving parts compared to ICE cars? For me the car feels like the horse a hundred years ago. Dirty smelly heavy noisy and soon obsolete.
bookofjoe 8y ago
I was surprised to find OP didn't cite what I believe to be an even more existential threat: the rise of Tesla's bit-based cabin vs. the atom-based tradition of legacy makers. Compare the Model S with its elegant, minimalist, understandable layout vs. the latest Mercedes-Benz S-Class cabin, which resembles a miniaturized version of the space shuttle: countless dials, screens, buttons, switches, levers, and lights above, in front of, below, and to the sides of the driver.
- ff10 8y ago
  You imply that traditional dashboards are too complicated. However, Tesla is merely hiding that complexity behind one or a few screens an a few buttons. I like the approach to minimalism, but in my opinion there has to be a balance between pragmatism and beauty. The learning curve and ease of access is just lower in German (or traditional) dashboards in general. I am not sure if Tesla found that particular balance. I hear a lot of hate towards the giant screen and no love, but that is just anecdotal. I assume Tesla went so radical in the Model 3 to save costs, rather than to stay minimalistic.
  - dustindiamond 8y ago
    I agree with the parent. The UX of the Tesla Model S seems like a cohesive design from a coordinated team. The 2018 Audi S4, lacks the cohesiveness and the UX is a bit overwhelming.
- jsemrau 8y ago
  I worked for a car company and that is at least there the result of internal politics and power structures.
localhoat 8y ago
I always laugh when these dinosaurs try to do stuff they can’t. As if a partnership with Microsoft would safe them. The only reason why they are not Nokia yet - is because those cars have longer lifecycles. The products are substantially crappier than Tesla or byd.
Proven 8y ago
> VW CEO Diess says the transformation of the industry could cost German firms around €100 billion. Blame the government and EU. More expensive cars which couldn't be sold, and wouldn't be bought, were it not for the government. Perfect storm, yes, but of statism and central planning.

108 points by lawrenceyan 8y ago

I don't like how the subtitle reads "American tariffs, a Chinese slowdown..." but the article text says "possible US tariffs". It seems misleading to lead with 'tariffs' when they are only 'possible tariffs'. Makes it seem click-baity.

sremani 8y ago
1. Auto industry is so vested in China market for their growth, because of US - China trade war that growth opportunity is more or less gone for at least now 2. US is a mature but substantial auto market, with possible tariffs (highly likely since EU and US are not even seriously talking trade) will pull the rug from the under. 3. Debt in developing markets is high, there are only handful of places where there can be some growth but do not have size and heft of US or China markets
sintaxi 8y ago
I agree, and further to your point America has made it clear they only intend to apply tariffs that mirror what is applied to America.
matt4077 8y ago
When you're "facing" a storm, it is one visible on the horizon. The term implies forward-looking (and therefore uncertain) predictions. Subheads also work rather bad as click-bait, considering you only get to read them after clicking the link.
desdiv 8y ago
"American tariffs" refers to the tariffs raised by President Donald J Trump against _China_ on March 22, 2018. This and the ensuring Chinese retaliatory tariffs has already taken effect for almost a year now and has already cost German car makers dearly: >China’s 40 percent retaliatory tariffs on US car imports has already cost the Bavarian company €300 million ($340 million). ===================================== "Possible US tariffs" refers to tariffs on imported cars and parts being considered against _all countries_[0]. These tariffs are separate and in addition to the Chinese tariffs. >U.S. Commerce Department recommendations into whether Trump should impose tariffs of up to 25 percent on imported cars and parts on national security grounds are due by mid-February. [0] https://www.reuters.com/article/us-autos-trade/trump-inclined-to-impose-new-u-s-auto-tariffs-senator-idUSKCN1PA31S https://www.reuters.com/article/us-autos-trade/trump-incline...

clouddrover 8y ago

Perfect storms aside, I think Volkswagen will be the biggest producer of EVs within 3 years. They're targeting the high end with the Porsche Taycan, the Porsche Macan EV, and the future Audi e-tron GT which will be based on the Taycan's platform: https://www.cnet.com/roadshow/news/porsche-double-taycan-ev-production-demand/ https://www.cnet.com/roadshow/news/porsche-double-taycan-ev-... https://www.cnet.com/roadshow/news/porsche-macan-electric-only-official/ https://www.cnet.com/roadshow/news/porsche-macan-electric-on... Volkswagen's MEB platform targets mid-range vehicles and will be used for models across the VW, Audi, Skoda, and SEAT brands: https://en.wikipedia.org/wiki/Volkswagen_Group_MEB_platform https://en.wikipedia.org/wiki/Volkswagen_Group_MEB_platform https://jalopnik.com/the-fascinating-engineering-behind-vws-electric-car-pla-1829257860 https://jalopnik.com/the-fascinating-engineering-behind-vws-... And Volkswagen is looking to license the MEB platform to other manufacturers: https://jalopnik.com/volkswagen-wants-other-automakers-to-use-its-meb-electr-1832269531 https://jalopnik.com/volkswagen-wants-other-automakers-to-us... Ford will probably license the MEB platform for their EVs.

lazyjones 8y ago
> Perfect storms aside, I think Volkswagen will be the biggest producer of EVs within 3 years. What makes you think they stand a chance against Chinese manufacturers who face huge demand in their home market (whereas in Germany, EV are still looked down upon)? It looks like 60% of global PEV sales in 2019 will be in China - just look at all these models and manufacturers: https://cleantechnica.com/2019/02/24/china-electric-vehicle-sales-jump-175-up-to-4-8-of-auto-market-in-january/ https://cleantechnica.com/2019/02/24/china-electric-vehicle-...
- clouddrover 8y ago
  Because the world car market is bigger than just China, because Volkswagen is the world's second biggest car company, and because VW is big enough to spend its way out of trouble (which is what it's doing now).
  - lazyjones 8y ago

l4u532 8y ago

As a German, I am quite happy about this. What you must know is that German organisations are extremely hierarchical, with little information flowing from frontline management to to top management. Hence, change only happens top down and only if the top managers in their ivory towers deem it necessary. But it’s incredibly important that our automakers reinvent themselves. And here we have the necessary angst to drive this long-needed transformation of our automotive sector.

ahartmetz 8y ago
Not all German organizations are like that. The car industry is especially dysfunctional. I've been watching them fail at software for years now. The problem, as far as I can tell, is as follows: top management is able and motivated to increase the size of the money bag. Developers just want to do a good job for a good salary. Middle management can't change the size of the money bag too much, so it just wants to grab as much as possible for itself. How does a middle manager expand their empire? Certainly not by leading a small, effective organization. The head count needs to grow, so the middle manager wants ineffective developers. It only works because no one above knows enough about software to fairly evaluate the work of these petty empire-builders. One time I wanted to gauge how far the car industry has come from realizing the problem to implementing a solution, so I typed something like "automotive software crisis" into Google. Among the first few hits a presentation of a German CS professor stating that there is a crisis... and that the solution is model-driven development. It's the exact shit that they are already doing that is not working. If good software is produced in Germany, it's despite subpar academic CS and dysfunctional large companies. Much of Germany's economy is medium-sized companies - fortunately, I guess. I do expect the German car industry to fix its software but only when it's really suffering financially. Car industry outsiders will be heavily involved in the solution.
- adrianN 8y ago
  Academic CS in Germany is world-class.
  - ahartmetz 8y ago

andreagrandi 8y ago

"The German industry was hit by slump in sales in the third and fourth quarters of last year" Oh really? I asked the shipping time for a Polo (2017 model) and I've been told 160-180 days. I'm not surprised if they don't sell many cars.

Tade0 8y ago
My friend got "up to 270 days" on a Skoda Superb. The wait for a very specifically optioned Prius in my country, in which barely several hundred of these vehicles are moved annually, is at most four months from commission to getting the keys.

Haga 8y ago

A company can not invent away from theire main field - in this case combustion engines. Every time the weather changes some of those in Old power will backstab the internal upstarts.

_the_inflator 8y ago
It is about mobility. Why limit yourself to cars? Why not offer e scooters, bikes? The whole concept of owning a car is wrong. With German cities becoming more and more like megacities, it is important to focus on mobility and not on selling cars.
- Haga 8y ago
  It's the linear mindset that's the main problem. None of these guys would even dare the gaben bezos dream of becoming the market. There is no open appstore in any of these cars.

sonnyblarney 8y ago

VW is trying to reconstitutes their entire fleet onto a 'single platform' or at least something resembling that. This is a core part of their long term strategy that's oft not talked about [1] [1] https://en.wikipedia.org/wiki/Volkswagen_Group_MLB_platform https://en.wikipedia.org/wiki/Volkswagen_Group_MLB_platform

edem 8y ago

About time. I had the "luck" of working for multiple German companies (including Volkswagen) and I'm surprised how these behemoths still function. As a grunt programmer, it was painful to see how the upper management made decisions based on politics which made no technological sense whatsoever. In my years of working for German companies I saw multiple project reboots, millions of $s thrown out of the window on failed projects and the worst thing is that there is literally no flow of information from bottom to top. No matter how smart you are if someone is above you in the hierarchy you are nothing, no one. I hope they will fail spectacularly and learn this hard lesson finally.

iagovar 8y ago
They won't learn. I work for another euro behemoth and it's exactly the situation you describe. As long as they pay me and support my lifestyle I have no problem, but Im already tired of trying to fight the nonsense. Sadly Im not a programmer so finding other companies with the same conditions is hard.
- edem 8y ago
  I'd really like to be able to just sit and do the work and don't care about these things (I'm not talking about you but the ability in general). I just can't help myself. I'm always trying to fix things but with a company like this it feels like as if I was trying to climb the Mount Everest.
  - iagovar 8y ago
    Well, I got to a point that I had to decide. If I hop to another job I'll work more hours, for less money, and I won't be able to stay here, which is nice because I have both my job and the beach on a 5 minutes distance walk.
- lnsru 8y ago
  Exact my situation. Working for a company with roots in Siemens. The culture is terrible, must fight the nonsense to get some meaningful task. Getting insane money for doing nothing, loosing skills every month, mental health suffers, but family depends on my income. Finding other companies in Germany with similar conditions is hard, looking now in Switzerland.

superkuh 8y ago

This website attempts to tell me that javascript is required but it's not. They just want users to execute arbitrary third party code. Turning off CSS allows access to the full article text.

Phenomenit 8y ago

Is it even possible for the these behemoths to exist when the demand for cars is decreasing and alternatives are exploding with the advent of batteries and electric motors powering every mode of transportation from bicycle(I love my Ebike) to skateboards? And is it possible for the suppliers to survive when you have so many fever moving parts compared to ICE cars? For me the car feels like the horse a hundred years ago. Dirty smelly heavy noisy and soon obsolete.

bookofjoe 8y ago

I was surprised to find OP didn't cite what I believe to be an even more existential threat: the rise of Tesla's bit-based cabin vs. the atom-based tradition of legacy makers. Compare the Model S with its elegant, minimalist, understandable layout vs. the latest Mercedes-Benz S-Class cabin, which resembles a miniaturized version of the space shuttle: countless dials, screens, buttons, switches, levers, and lights above, in front of, below, and to the sides of the driver.

ff10 8y ago
You imply that traditional dashboards are too complicated. However, Tesla is merely hiding that complexity behind one or a few screens an a few buttons. I like the approach to minimalism, but in my opinion there has to be a balance between pragmatism and beauty. The learning curve and ease of access is just lower in German (or traditional) dashboards in general. I am not sure if Tesla found that particular balance. I hear a lot of hate towards the giant screen and no love, but that is just anecdotal. I assume Tesla went so radical in the Model 3 to save costs, rather than to stay minimalistic.
- dustindiamond 8y ago
  I agree with the parent. The UX of the Tesla Model S seems like a cohesive design from a coordinated team. The 2018 Audi S4, lacks the cohesiveness and the UX is a bit overwhelming.
jsemrau 8y ago
I worked for a car company and that is at least there the result of internal politics and power structures.

localhoat 8y ago

I always laugh when these dinosaurs try to do stuff they can’t. As if a partnership with Microsoft would safe them. The only reason why they are not Nokia yet - is because those cars have longer lifecycles. The products are substantially crappier than Tesla or byd.

Proven 8y ago

> VW CEO Diess says the transformation of the industry could cost German firms around €100 billion. Blame the government and EU. More expensive cars which couldn't be sold, and wouldn't be bought, were it not for the government. Perfect storm, yes, but of statism and central planning.