Volkswagen’s woes and Germany’s decline
Katja Hoyer, an Anglo-German historian and journalist, is the author of “Blood and Iron: The Rise and Fall of the German Empire 1871-1918.”For the first time ever, German car giant Volkswagen is considering factory closures in its home country. It’s hard to overstate just how gloomy this news feels in Germany. Volkswagen AG is Europe’s largest car manufacturer and helps uphold Germany’s status as a global economic powerhouse. Employees, politicians and company bosses are rightly demanding resolute action to save these jobs.How to do so is not immediately obvious. Volkswagen’s troubles did not begin yesterday but are the result of a long series of bad decisions — both at the European Union level and in Germany. And these troubles are a stand-in for a larger crisis facing Germany as a whole: the slow death of its industry, which has in turn helped push many voters into the arms of far-right political parties.Volkswagen needs the freedom to work with the market as it is, not as politicians want it to be. Tough emission targets, and the E.U.’s decision to ban the sale of new carbon-dioxide-emitting cars starting in 2035, have forced Volkswagen to direct its investment and creative energy toward electric vehicles, a market that has fallen short of expectations. Two out of three Germans would still buy traditional cars, a recent study showed. Fewer than 1 in 3 Americans say they would seriously consider buying an EV, according to another recent survey. The British car expert and “The Grand Tour” presenter James May, who is pro-EV in principle, thinks consumers are right to be skeptical. He told me that the technology isn’t “good enough” yet — a problem for the market to solve, not government.Follow Opinions on the newsThough the E.U. is meant to set environmental standards, German politicians need not be passive in the face of their proposals. Indeed, Brussels’ EV policy is deeply unpopular across the continent. European Commission President Ursula von der Leyen has been forced to advocate exceptions for so-called e-fuels to keep her job following a rightward shift in the E.U. Parliament after elections this past June. And Germany’s far-right Alternative for Germany (AfD), which came second in those same elections in Germany, has promised to fight the 2035 ban “with all political means available.”German politicians are acutely aware of the political sensitivity around the German auto industry. At the plant in Zwickau, 5,000 angry employees gathered on Thursday booing and whistling when the CEO of Volkswagen Passenger Cars, Thomas Schäfer appeared. Ronny Niebuhr, who said he had worked for the company for 30 years, told reporters he had lost trust in it. A female employee said she feels she is suffering for the mistakes of others.State elections in Germany this week featured the first major breakthrough of a far-right party since the World War II era; the AfD gained around one-third of the votes in Thuringia and Saxony. Though EV mandates were far from the only driver of discontent, in Thuringia, the party notably won on a manifesto that promised “no ifs or buts” in its commitment to the internal combustion engine. And in Saxony, where some 11,000 people work at Volkswagen’s Zwickau facility and now fear for their jobs, the AfD came second behind the Christian Conservatives (CDU), the party of the current state leader Michael Kretschmer, who also wants combustion engines to stay. “Politics doesn’t know better than the market and the millions of car divers in the E.U.,” he has argued.Would lifting EV mandates save Volkswagen? It’s not cut and dried. But it’s also never too soon to end the harmful combination of political micromanagement and lack of strategic foresight that has been a hallmark of recent German politics.Getting German politicians to be more strategic will be difficult. During her 16 years as chancellor, Angela Merkel was permanently in crisis-management mode. What she euphemistically called “driving by sight” effectively meant reacting to pressure rather than thinking ahead.The car industry’s fate on Merkel’s watch is as good a case study as any. Her instincts had initially been on the side of the German automakers. In 2020, she rejected stricter emission rules in an effort to save the industry from an early death. “Of course we will still rely on combustion engines for years,” she said then. But in 2021, when the E.U. moved toward enacting the 2035 ban, Merkel merely looked on, unwilling to rock the boat. When her time in office was up, the defense of the German industry fell to her successor, Olaf Scholz, whose hands were tied by his need to rely on the Green Party as a coalition partner.Merkel also famously muddled through on other critical issues, such as immigration and energy. The end result has been that politics as usual in Germany have been upended: the slow death of German industry, coupled with high energy prices and uncontrolled migration, have fueled the rise of the far right. The AfD is currently projected to come in second in federal elections next year.Many of Germany’s political leaders continue to hope to muddle through, as well. But Germany cannot continue to put its head in the sand in the hope that its slow economic and political disintegration will miraculously stop. Getting the German car industry back on a firm footing would be a good first step.But the next German government should look to do much more.
German politicians will have to reckon with decades of bad decisions — and adjust course fast.
Katja Hoyer, an Anglo-German historian and journalist, is the author of “Blood and Iron: The Rise and Fall of the German Empire 1871-1918.”
For the first time ever, German car giant Volkswagen is considering factory closures in its home country. It’s hard to overstate just how gloomy this news feels in Germany. Volkswagen AG is Europe’s largest car manufacturer and helps uphold Germany’s status as a global economic powerhouse. Employees, politicians and company bosses are rightly demanding resolute action to save these jobs.
How to do so is not immediately obvious. Volkswagen’s troubles did not begin yesterday but are the result of a long series of bad decisions — both at the European Union level and in Germany. And these troubles are a stand-in for a larger crisis facing Germany as a whole: the slow death of its industry, which has in turn helped push many voters into the arms of far-right political parties.
Volkswagen needs the freedom to work with the market as it is, not as politicians want it to be. Tough emission targets, and the E.U.’s decision to ban the sale of new carbon-dioxide-emitting cars starting in 2035, have forced Volkswagen to direct its investment and creative energy toward electric vehicles, a market that has fallen short of expectations. Two out of three Germans would still buy traditional cars, a recent study showed. Fewer than 1 in 3 Americans say they would seriously consider buying an EV, according to another recent survey. The British car expert and “The Grand Tour” presenter James May, who is pro-EV in principle, thinks consumers are right to be skeptical. He told me that the technology isn’t “good enough” yet — a problem for the market to solve, not government.
Follow Opinions on the news
Though the E.U. is meant to set environmental standards, German politicians need not be passive in the face of their proposals. Indeed, Brussels’ EV policy is deeply unpopular across the continent. European Commission President Ursula von der Leyen has been forced to advocate exceptions for so-called e-fuels to keep her job following a rightward shift in the E.U. Parliament after elections this past June. And Germany’s far-right Alternative for Germany (AfD), which came second in those same elections in Germany, has promised to fight the 2035 ban “with all political means available.”
German politicians are acutely aware of the political sensitivity around the German auto industry. At the plant in Zwickau, 5,000 angry employees gathered on Thursday booing and whistling when the CEO of Volkswagen Passenger Cars, Thomas Schäfer appeared. Ronny Niebuhr, who said he had worked for the company for 30 years, told reporters he had lost trust in it. A female employee said she feels she is suffering for the mistakes of others.
State elections in Germany this week featured the first major breakthrough of a far-right party since the World War II era; the AfD gained around one-third of the votes in Thuringia and Saxony. Though EV mandates were far from the only driver of discontent, in Thuringia, the party notably won on a manifesto that promised “no ifs or buts” in its commitment to the internal combustion engine. And in Saxony, where some 11,000 people work at Volkswagen’s Zwickau facility and now fear for their jobs, the AfD came second behind the Christian Conservatives (CDU), the party of the current state leader Michael Kretschmer, who also wants combustion engines to stay. “Politics doesn’t know better than the market and the millions of car divers in the E.U.,” he has argued.
Would lifting EV mandates save Volkswagen? It’s not cut and dried. But it’s also never too soon to end the harmful combination of political micromanagement and lack of strategic foresight that has been a hallmark of recent German politics.
Getting German politicians to be more strategic will be difficult. During her 16 years as chancellor, Angela Merkel was permanently in crisis-management mode. What she euphemistically called “driving by sight” effectively meant reacting to pressure rather than thinking ahead.
The car industry’s fate on Merkel’s watch is as good a case study as any. Her instincts had initially been on the side of the German automakers. In 2020, she rejected stricter emission rules in an effort to save the industry from an early death. “Of course we will still rely on combustion engines for years,” she said then. But in 2021, when the E.U. moved toward enacting the 2035 ban, Merkel merely looked on, unwilling to rock the boat. When her time in office was up, the defense of the German industry fell to her successor, Olaf Scholz, whose hands were tied by his need to rely on the Green Party as a coalition partner.
Merkel also famously muddled through on other critical issues, such as immigration and energy. The end result has been that politics as usual in Germany have been upended: the slow death of German industry, coupled with high energy prices and uncontrolled migration, have fueled the rise of the far right. The AfD is currently projected to come in second in federal elections next year.
Many of Germany’s political leaders continue to hope to muddle through, as well. But Germany cannot continue to put its head in the sand in the hope that its slow economic and political disintegration will miraculously stop. Getting the German car industry back on a firm footing would be a good first step.
But the next German government should look to do much more.