Germany is at a crossroads, and nowhere will that be more evident than at the Frankfurt auto show this week.<\/p>\n
Despite sleek new electric models like the Porsche Taycan, the traditional showcase of German automotive excellence risks becoming a platform for protest rather than preening, drawing attention to a generation of young consumers more likely to demonstrate against the car\u2019s role in global warming than shop for a new VW, BMW or Mercedes-Benz.<\/p>\n
Autos have made Germany into a global manufacturing powerhouse, but pollution concerns — intensified by Volkswagen AG\u2019s 2015 diesel-cheating scandal — have sullied the reputation of a product that once embodied individual freedom. More recently, trade woes and slowing economies have hit demand. The consequence is Germany\u2019s car production slumping to the lowest level since at least 2010.<\/p>\n
Sputtering Output<\/strong><\/p>\n \u201cInvestors have been fearful about the industry\u2019s prospects for a number of years, and the list of things to worry about doesn\u2019t seem to be getting shorter,\u201d said Max Warburton, a London-based analyst with Sanford C. Bernstein. \u201cThere is a general sense that things are about to get worse.\u201d<\/p>\n The end of the combustion-engine era and car buyers more interested in data connectivity than horsepower threaten Germany\u2019s spot at the top of the automotive pecking order.<\/p>\n Signs of trouble abound. In addition to numerous profit warnings this year, Mercedes maker Daimler AG delayed a plan to expand capacity at a Hungarian factory, parts giant Continental AG has started talks to cut jobs, and automotive supplier Eisenmann filed for insolvency.<\/p>\n The car\u2019s fragile standing was evident in the reaction to a deadly accident in Berlin on Friday evening when a Porsche SUV crashed into a group of pedestrians. Stephan von Dassel, the mayor of the district where the incident took place, said on Twitter that \u201csuch tank-like vehicles\u201d should be banned in the city.<\/p>\n Germany is teetering on the brink of recession, and the auto industry is pivotal to the economy\u2019s health. Carmakers such as Volkswagen, Daimler and BMW AG as well as parts suppliers like Robert Bosch GmbH and Continental employ about 830,000 people in the country and support everything from machine makers to advertising agencies and cleaning services.<\/p>\n With factories from Portugal to Poland, the importance of the sector radiates across Europe as well.<\/p>\n With emissions regulations set to tighten starting next year, concerns are mounting that companies across the country\u2019s industrial landscape are ill-equipped to deal with the technology transition resulting from climate change and increasing levels of digitalisation.<\/p>\n IG Metall organised a demonstration in June, with more than 50,000 people rallying in Berlin, to draw attention to the risk of widespread layoffs from what Germany\u2019s biggest industrial union calls \u201cthe transformation.\u201d<\/p>\n Far too many companies stick their heads in the sand and rest on their laurels,\u201d IG Metall Chairman Joerg Hofmann said. \u201cIf companies continue to act so defensively, they\u2019re playing roulette with the futures of their workers.\u201d<\/p>\n The concern is that the future of Germany\u2019s car towns could look something like Ruesselsheim. The home of the Opel brand, which once rivalled VW as the German leader, has faded along with the carmaker\u2019s performance. After years of losses, it was sold in 2017 by General Motors Co. to France\u2019s PSA Group, which is slashing the Opel\u2019s 20,000-strong German workforce by nearly a fifth.<\/p>\n \u201cEverybody in Ruesselsheim is worried,\u201d said Servet Ibrahimoglu, owner of a kebab restaurant down the street from Opel\u2019s factory, adding that his business has dropped by a third. \u201cBefore at lunchtime, this place was full. Now there\u2019s no one.\u201d<\/p>\n The auto industry\u2019s efforts to adapt to the risks will be on display in Frankfurt, and the stakes couldn\u2019t be higher for models like the VW ID.3. The battery-powered hatchback is the auto giant\u2019s first effort in an aggressive push into electric cars, which will make its debut at the Germany\u2019s premier auto exhibition.<\/p>\n Under bright lights and blaring music, the show is a throwback to the auto industry\u2019s glory days, but it\u2019s fading as public interest in old-school car show wanes. Toyota, Volvo and Ferrari are among the 30 brands skipping the show. For those still there, the displays will predominantly feature traditional gas guzzlers and other cash cows. Land Rover will unveil a resurrected version of the Defender, the British brand\u2019s iconic off-roader.<\/p>\n \u201cInstead of presenting new mobility concepts for the future, we\u2019ll see lots of SUVs on stands that have become few and far between,\u201d said Ferdinand Dudenhoeffer, director of the University of Duisburg-Essen\u2019s Center for Automotive Research. \u201cThe recession in the global auto business is forcing savings cuts for car manufacturers and suppliers, along with a rapid loss of attractiveness of the classic \u2018analog\u2019 car shows.\u201d<\/p>\n Make or Break<\/strong><\/p>\n Where German brands once tried to outdo one another with outlandish displays like indoor tracks and multi-story exhibition spaces, the main drama may take place outside Frankfurt\u2019s sprawling fairgrounds. Greenpeace and Germany\u2019s BUND have called for a mass march on the site on Saturday, joined by groups of cyclists setting off from around Frankfurt to underscore their call for the end of the combustion engine.<\/p>\n Despite doubts from environmentalists, automakers have gotten the message that they\u2019re facing a make-or-break moment. The industry is spending billions of euros to develop cleaner vehicles and counter the emergence of ride-sharing services like Uber Technologies Inc., which has a market value equivalent to Daimler, the inventor of the automobile.<\/p>\n \u201cI\u2019m absolutely convinced that carmakers will adapt to the situation,\u201d BMW\u2019s labor head Manfred Schoch said during a testy panel discussion with activists in Berlin last week. \u201cThose that don\u2019t will go out of business.\u201d<\/p>\n
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