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.
Thanks Bob.
Any time!
I heard a news announcement today that the new GM Volt will do 232 miles (in ideal...warm....conditions) before the battery runs out. GM is very proud of this remarkable technological achievement. Woweee!!! (I saw an ad out there for a 1914 electric car...with a similar range, not the ad here, but similar. Notice this one--from over 100 years ago...went 100 miles...about half of a new Tesla.)
For over 100 years, electric cars have always been 5 years away from being practical, and affordable.
For those of us that trust freedom and the free market--why do electrics & hybrids, even now--require MASSIVE government subsidies, if the technology is so great? Aren't consumers intelligent enough to buy them, if they were priced by the market?
Look at the trucking industry, or with farm tractors....no one will switch to electric any time soon...at all. The advantages and disadvantages--which Henry Ford knew 100 years ago, still remain unchanged.
Unless forbidden by foolish government regulation....petroleum vehicles will remain the best, and most popular--criminal German corporations or not.
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.
OK, let's return to the facts, without trying to appeal to your sense of humor. Clearly you have none.
Please tell me, in very small words so even a pea brain like me can understand, how German automakers colluding on the speed of retraction of a sunroof affects competition with General Motors, Ford, Kia, Toyota, Honda, or Tesla?
Don't like sunroof speeds? Pick another parameter from the article summary: the maximum size of the tank for the AdBlue chemical, brake systems, seats, suspension, or clutches.
Please tell me how Audi, BMW, Daimler, Volkswagen, and Porsche colluding on the maximum allowable clutch pedal pressure has hurt the consumer, hurt competition, or stifled innovation at Fiat, or Honda, or Chrysler, or Jaguar?
Now, if it can be proved that Audi, BMW, Daimler, Volkswagen, and Porsche colluded on how to program engine management systems to beat emissions testing, then I will agree with you that something criminal has happened. However, this article doesn't assert that. It asserts that the German companies colluded on the stiffness of the driver's seat.
But then we wouldn't let facts get in the way of a good collusion story, would we. The MSM also like good collusion stories without any facts backing them up regarding our 45th President. So you and the MSM have that in common, at least.
Exactly, where do people think S.A.E. came from?
Now for the really big question on my mind - Did they standardize the cup holder size and depth and collude with the manufactures of said cups? Because if they didn't then screw'em, because that's what really matters to me. I have a BMW 740Il, damn thing won't keep a cup from spilling parked at a drive in, much less Indiana roads...
Of course a manual.. some cars should be banned as an automatic. I would like Vera thrill ride in a hellcat 6 speed.
Forget the Hellcat. You want a ride in a Demon!
While helping promote the global warming/climate change corporate steward BS, their own engineers know that the rising government fuel efficiency / emissions standards are unattainable.
Uh.....VW owns Bugatti as well as Audi and Porsche. In fact of the 5 auto makers listed only 3 are separate entities.
Aware. Gotta believe that for the $3MM there is a firewall between VW corporate and the Bugatti group.
Hey, at least it wasn't Renault, Peugeot or Citroen who bought them...
People who drive automatics have to constantly tap their brakes which desensitizes those behind to the message of the brake light. Also, driving a manual requires increased driver engagement to the vehicle thus lessening likelihood of errors or absentmindedness behind the wheel. Third, manual drivers are LESS LIKELY to do other things like text, drink, eat behind the wheel because THEY DO NOT HAVE A FREE HAND WHILE DRIVING; BOTH HANDS ARE BUSY DRIVING!
API ( american petroleum institute ) has a few hundred little engineering committees where reps from various suppliers battle it out to develop API Specs on zillions of items.
It’s so routine, I am wondering if this story is some sort of set-up.
One way.
Diesel won’t fit in gas for most cars these days.
Gas fits in Diesel just fine.
Häagen-Dazs,
Gesundheit.
Diesels now have multiple miniature chemical plants that need periods of regeneration.
I suspect that these regenerations are NOT scheduled during emissions testing, nor are they required to be.
It’a regulatory/technical response swamp.
Here's a photo of the engine in "my other car", and it's a 4BBL carb. Betcha can't guess what it is..
Off and on, since 1978, I’ve had around 20 years in Germany, and have watched the three or four versions come and go.
I can remember the West German version, and the relative safe atmosphere...although with the Red Army still active. Crime as was almost non-existent.
Then I can remember the wall coming down period (1990s) where everyone was hyped up about Berlin now becoming the capital again, and massive building was going on throughout all of Berlin.
Then I can remember the 2000 to 2005 period where the Euro got introduced, and prices escalated, with crime becoming more noticeable.
Since 2013, I’ve arrived at the 4th version....mostly a place where you focus on people around you and continually think about crime. You have sensor lights around the house to scare the break-in crowd. You shake your head over prices. You get amazed that American franchises are showing up (Dunkin, Starbucks, Subway, etc) but then you look at the pricing scheme and laugh. Taxation has created this massive public revenue machine, which wastes billions per year.
I’ll probably be around to see the fifth and sixth versions of Germany, but I have no idea how they will fall into place.
I drive a manual because, it’s faster and more reliable. It’s also cheaper to fix. Trust me the idiots will still try to text and drive, even with a manual.
were. The % of diesel cars dropped to 36% in the months of this year and look to drop down to 30% by 2018
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