Posted on 07/25/2017 8:26:16 AM PDT by Kaslin
Unmasking an Illegal Cartel
The German auto scandal just got much bigger according to a new report by the Spiegel.
Audi, BMW, Daimler, Volkswagen, and Porsche colluded in all aspects of diesel technology.
Effectively, the five corporations acted as one via a series of secret working groups that met several times a year.
The Spiegel broke the story with its report on the Auto Syndicate Scandal.
The story is in German, and it’s also behind a pay wall. Eurointelligence has a nice Email report.
Spiegel magazine has an absolutely shocking account of a cartel between the five motor companies – VW, Daimler, BMM, Porsche, and Audi. The original article is worse than any summary we have read because of the many details the two authors have dug up in a large investigation. Coming on top of the diesel emissions scandal, the reputation of the German car industry has been reduced to that of a criminal organization. Unlike the authors, we are less worried about the fines, which will be large, than about the long-term commercial impact.
This is one of the largest cartel cases in German history. The meetings started in the 1990s. The car makers created 60 working groups, each specializing on a different part of the car. For example, they agreed on the maximum speed at which a sunroof opens or closes while the car is in motion, or the maximum size of the tank for the AdBlue chemical which reduces certain toxic emissions. There were working groups for brake systems, for seats, for suspension, for clutches, and naturally also for diesel and petrol engines.
The working groups met several times a year in the cities where the car companies have their HQ’s, like Munich, Stuttgart, or Wolfsburg; as well as during the large European motor shows in Frankfurt, Geneva, and Paris. They also held teleconferences in between meetings. They were quite cocky. An Audi email reads:
“Hello everybody, please find attached the date for the ‘secret’ meeting in Munich.”
The authors, two of Germany’s most renowned business journalists, said the cooperation has gone so far that these companies can no longer be regarded as in competition with one another but as a single Deutsche Automobil AG.
All the companies, except BMW, have admitted the meetings when questioned by the EU Commission and the Federal Cartel Office.
When industries decline, this type of behavior is very common in the penultimate phase. The industry profits are still high. The companies are still benefitting enormously from past inventions and product developments. As we now know, the German car industry was able to maintain their predominance beyond the natural sell-by date through a cartel. They are approximately at the same stage where Detroit was just before 1967.
The problem with the German car industry specifically is that they bet the house on diesel technology, and used their influence on the German government to prevent more stringent testing of emissions. The function of the cartel was to maintain profit margins, and in particular to secure the predominance of the diesel technology.
The German public had an extraordinary degree of trust in the industry, partly also because German auto journalists failed to do their job since they were part of the cartel.
The next ten years will see two significant developments, for which the German car industry is not prepared: one is the gradual switch towards hybrid and electrical engines, and the other is the advent of artificial intelligence. The German car industry has a lot of patents for electric engines, but they are globally not the leading force. And now their reputation is tarnished.
We don’t expect rapid falls in sales immediately but see an unrecoverable loss of reputation in the long-term because we are confident to predict that the industry will not clean up the mess it has created. Rather, it will seek a cover-up or direct protection from the government. The tendency will be to sit this out, and the government will avoid an open confrontation given the many jobs that depend on that industry. This may delay the onset of a crisis for a while, but will ultimately accelerate it.
Merkel to the Rescue?
Massive fines are on the way but Merkel will do whatever she can to reduce the fines and the impact.
The amazing thing to me is how long these corporations got away with this.
Trust is lost and diesel is toast. The latter was true even without this latest scandal.
Yes, only governments should develop standards. They do such a great job of it. /s
Actually they are called "Büstenhalter"
Could be, I just don’t recall. I’ve been gone permanently from Germany 38 years.
It’s a Swabian folks song we learned in school
Funny that, I’ve been *back* in Germany for 38 years...permanently? who knows...
Have a great day!
I do have a great memory from my youth and early adult hood that I treasure, but would not want to go back because so much has changed.
I was a little over 25 when my husband was transferred back to the states after having been stationed there since December 1961. We left Frankfurt, Germany on September 25, 1966 and arrived at Fort Dix 9/25/1966. After we went through the immigration procedure I received my Green Card
I used to have that T-shirt. Most comments of any shirt I’ve owned. I’m glad my Jetta is pre-ban. 52 mpg 630 miles on a tank.
what year was the ban?
I believe 2011 and beyond model years are affected. I just call it pre-ban as a joke like “pre-ban AR 15”.
What a HUGE relief that Bugatti was not named! Now I can get back to counting the change from the penny jars that I need to get to that $3MM...hopefully before #450 Chiron is completed!
And it hurts the consumer how, exactly?
Good news! Just found out that they are making 500 Chiron (they made 450 Veyron) so I may have all that change counted by then...or not.
When competing companies are making secret deals to not actually compete with each other consumers are losing out on technological advances. There’s a long list of things they agreed should basically work the same for all cars, that’s a lot of stagnation.
Not long ago, I got a job from a big law firm checking e-mail translations from certain well-known Japanese car companies. Much of what you stated can be confirmed.
Gee, who sells an AWD, manual transmission, turbocharged (for altitude compensated performance) engine, box on wheels in the US?
In the immortal words of Sherman T. Potter;
Germans agreeing on the speed of retraction of a sun roof does not stagnate innovation at GM, Toyota, Hundai, or Fiat.
Oh look, an animated gif, gee how to argue with that. Oh yeah, with FACTS. It didn’t end with the sunroofs, that’s just an example I picked because it clearly shows they weren’t doing the normal, perfectly acceptable, standards design. They were working on feature matching, which included stalling engine design for performance and efficiency.
Any horse hockey here is coming exclusively from you. The deliberately and illegally engaged in anti-competitive collusion. Sorry that seems to be too complicated for you to understand, but that’s your problem. And Sherman T Potter would get it, and he’d think you’re a pointlessly insulting waste. They were wrong, you are wrong, we are done.
“I thought the nozzles were different on diesel and gas pumps making it impossible to fuel up with the wrong fuel.”
They are different...diesel nozzles are slightly larger than gas. So you can’t stick a diesel nozzle into a gas filler neck, which is why you don’t read about San Francisco cat ladies wrecking their engines.
But the other way doesn’t work to protect the unaware person...you CAN stick a gas nozzle into a diesel car, since it’s smaller. The idea probably being that if you’re smart enough to own a diesel, you should be smart enough to know what to fill the tank with.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
