Monday, June 11, 2018

Recession, Bah! Me Fun, Fun, Fun on Ze Autobahn

The (American) Rock and Roll Hall of Fame tends to be biased towards Anglo-Saxon acts. As a result of this bias, a most unforgivable act has been committed: synth pop pioneers Kraftwerk have not even been inducted into the HoF despite their outsized influence on pop music. In its review of the superb live set Minimum-Maximum from which the above clip is taken, the New Music Express says things like they are: Given the proliferation of synth-based pop acts that have come in their wake, the two most influential acts in pop history are not the Beatles and (Rolling) Stones, but the Beatles and Kraftwerk. All I can say is "Amen!" Given that Kraftwerk founder Florian Schneider has just left the music scene some forty years after co-founding the group, some respect is long due these great German entertainers.

This musing was prompted by news that German automakers are partially bucking the global trend of dwindling auto sales at home. A few months ago, I discussed how automakers were keen on EU governments ladling incentives for those driving older cars not meeting upcoming emissions regulations to switch to newer, less polluting drives. It turns out that the German government has largely acceded to this request, as have any number of other EU states. We are now beginning to see the results. From TIME:
Amid the gruesome headlines generated by the world's auto industry these days, this one almost reads like a typo: new car registrations in Germany rose 21% year-on-year in February, the country's Association of the Automotive Industry (VDA) announced on March 3. This, though, was no error. The 278,000 cars put on the road, crowed Matthias Wissmann, the VDA's president, amounted to "the highest level of sales in the month of February for 10 years."

Why the splurge? German drivers have latched onto a juicy new deal. Under a scheme started in January, car owners who trade in a vehicle that is more than nine years old for a new, greener model can expect $3,172 from the German government as well as a break from paying road tax for at least a year. Similar "scrapping schemes" have been launched in recent months in France, Italy and Spain. Now motor manufacturers in Britain are pleading with their government to follow suit.

It's not hard to fathom why. Carmakers are grappling with an extraordinary shortage of credit and customers. Sales in Europe — the $700 billion auto industry there accounts directly or indirectly for 1 in 10 jobs — dropped to a 15-year low last year, with little sign of picking up in 2009. Toyota announced earlier this week that 4,500 staff members at its British factories would see their pay and hours slashed 10% for a year starting in April. German and British governments are still in talks with General Motors over potential aid for the U.S. automaker's beleaguered European subsidiaries, Opel in Germany and Vauxhall in the U.K. GM says it needs some $4.2 billion to save its businesses in the region.

Amid that carnage, scrapping schemes can offer something for the pain. The aim is to pump up weak car sales while at the same time taking older, potentially more polluting vehicles off the road. And it seems to be working — at least in Germany. With new car orders in Europe's largest car market rising in February, the VDA expects registrations for the first quarter of 2009 to trump those seen in the same period last year. A more modest $1,300 on offer to French motorists hasn't been enough to prevent car sales there from sliding 13% last month. Scrapping schemes in Italy and Spain failed to halt even steeper falls.

Even when it works, a scrapping scheme won't guarantee that the money will go to domestic carmakers. In Germany, sales of the Volkswagen Polo and Opel Corsa have been boosted by the government's initiative, but a surge in orders for Fiat (Italy) and Renault (France) means "two-thirds of the additional sales are imported cars," says Ferdinand Dudenhöffer, an auto-industry expert at the University of Duisburg-Essen. "And most of the German cars which are booming are at least partly produced elsewhere."

That might help explain the British government's hesitation to launch an initiative of its own. Almost 90% of all cars sold in the U.K. are imported, with most of those arriving from continental Europe. So a British scrapping scheme "wouldn't be a huge boost to British car factories," says Garel Rhys, president of Cardiff University's Centre for Automotive Industry Research. "In a sense it would be the British taxpayer subsidizing factories in France and Germany..."
Doubtless, there's still a long road to go in restoring sales elsewhere. The trick in avoiding the "protectionist" tag I warned of earlier is that these deals are open to all comers, including American nameplates Adam Opel (GM) and Ford. In contrast to oversized American clunkers, Opels and European Fords are generally fine cars. The article then goes on to caution that a glut of sales now may be stealing future sales. Overall, though, I think this is a pretty good idea for boosting flagging sales and cleaning up the air. Surely, Kraftwerk would approve. Godspeed, Florian Schneider, and may the autobahn forever resonate with automotive fervor.

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