If you believe a recent study by the German Economic Institute (IW), the best years for the country’s carmakers have passed, and the all-important auto sector “will fail as an engine of growth” as a result of the coronavirus .pandemic . The Cologne-based IW published its findings on Tuesday, when auto bosses are meeting officials from the government to seek ways out of the massive slump caused by the pandemic-induced economic crisis and the emergence of the electric vehicle as an environmentally friendly alternative to the internal combustion engine. The demand shock due to lockdown measures across the world is compounding problems of oversupply and technological change in the auto industry that already existed before the outbreak of the virus, depleting carmakers’ cash reserves at a rapid pace. The mixture is especially toxic in Germany, where almost 10% of gross domestic product (GDP) hails from carmakers and their suppliers. More than 930,000 people work directly or indirectly in the auto sector, while 40% of Germany’s overall research and development (R&D) expenditure is made by the industry. Vertical pressure So-called car summits have become almost routine exercises in German politics, as the pressure in the key industrial sector has been mounting for quite… Read full this story
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