Germany's diesel dangers
The German car sector is under serious threat from possible multiple diesel bans. The recent Federal Administrative Court’s decision to allow cities to institute independent restrictions on diesel vehicles – with Hamburg aiming to be the first metro to introduce one on stretches of two major roads – has added further uncertainty to the future of diesel when the German diesel car market share was just 38.8% last year, down from 45.9% in 2016
Ratings agency Moody’s says the court ruling will hit auto finance companies and dealers in particular due to their reliance on lease contracts, which account for three-quarters of all new cars registrations in Germany. German leasing giant Sixt Leasing said last week that it planned to substantially cut diesel car volumes in its retail and fleet segments, as well as slash its current portfolio of diesel vehicles by half.
“The fear of far-reaching diesel disincentives, including the possible elimination of tax breaks on diesel fuel, has reduced the appetite of German drivers to own even the latest generation of diesel cars,” says Moody’s.
The agency added that unless city diesel drivers get some kind of support to incentivise diesel ownership and retention, auto makers and dealers will have to remarket vehicles in more rural areas, or in countries where there are no driving restrictions.
However, that would mean car makers simply exporting polluting vehicles to markets such as the Czech Republic, Hungary and Poland, nd this because VW got caught out for cheating on emissions during Dieselgate. Howeverm there are calls for measures to be introduced so that cities like Prague and Budapest aren’t flooded with the cheap, noxious cars Germans no longer want.
This isn’t just about Volkswagen, though. European Union antitrust investigators last year raided BMW, Daimler and VW as part of a probe into possible long-standing collusion on technology across the car sector. Daimler has filed a leniency application with Brussels after coming forward to provide information about the possible cartel.
Allegations first emerged in Der Spiegel last summer that the country’s leading car makers have for decades been coordinating vehicle technological activities, as well as colluding on costs and diesel emissions controls, all to the detriment of consumers.
And the German government’s position? Chancellor Merkel’s pro-business stance means VW has come under what can only be described as light pressure given the seriousness of Dieselgate and the high pollution levels in some German cities. A Merkel weakened politically in last year’s election is highlu unlikely to consider any measures against the country’s powerful car makers that might cost jobs.