Friday 29 June 2018

The German car industry is rotten but Trump's tariffs could influence Brexit

I missed the story ten days ago that the Chief Executive of Audi had not only been arrested as the emissions scandal unfolds, but had been detained to prevent him obstructing the investigation*. That shows how rotten the culture in the senior management of the German car industry is - the German courts cannot trust them to play straight. Wow. Wolfgang Munchau says the German car industry is now tarnished with the reputation of a criminal racket**. He also says that President Trump's proposed tariffs of 20-25% on EU and Chinese cars "would pretty much destroy the business of importing cars from EU/China". Munchau goes on to say that this could have a profound impact on the Brexit discussions. "The UK is the largest export market for German car makers, followed by the US. If the US imposed tariffs, and if the Brexit talks were to collapse, the German auto industry would have to face crippling tariffs in three of its four largest export markets. The EU clearly has no interest in a hard Brexit in this situation."***

The fact that we buy a lot of Mercs, Beemers, Audis and VWs from this bunch of crooks could yet be material to Brexit, if only because of a renegade loose cannon of an American president. Wheels within wheels.....

*Audi chief arrested in Germany over diesel scandal, The Guardian 18 June 2018

** What the incarceration of the Audi chief implies, Eurointelligence 19 June 2018. Munchau's withering commentary is reproduced below

*** Trump's car tariff to come early, Eurointelligence, 25 June 2018

If you try to find these items on Eurointeilligence you may get directed to the subscription edition: click the link at the top of the right hand column for the shorter public section of the Eurointelligence Professional Briefing to see the free edition

"The jailing without bail of Rupert Stadler, Audi's chief, constitutes an astonishing escalation of the emissions scandal. It has now become clear that Audi was the centre of the diesel emissions scandal within the VW group, though the scandal was clearly not confined to that company. What has turned a damaging scandal into a industry-wide calamity is not the original act, bad as it was, but the way the protagonists have subsequently acted. The VW board behaves like an old-fashioned corporatist clique under attack. The strategy has been to obfuscate, to deny, to keep the dirt under the carpet. The German car industry is now tarnished with the reputation of a criminal racket. That would not have been an inevitable consequences of the crisis, if it had been professionally handled. But this should not be a surprise. If you are over-reliant on one industry, and on one company in particular, you are prone to becoming defensive when under attack." (Wolfgang Munchau, source at **)



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