The
Volkswagen emissions scandal has rocked Germany's business and political
establishment and analysts warn the crisis at the car maker could develop into
the biggest threat to Europe's largest economy.
Volkswagen Chief Executive Martin Winterkorn
paid the price for the scandal over rigged emissions tests when he resigned on
Wednesday and economists are now assessing its impact on a previously healthy
economy. "All of a sudden, Volkswagen has become a bigger downside risk
for the German economy than the Greek debt crisis," ING chief economist
Carsten Brzeski told Reuters.
"If Volkswagen's sales were to plunge
in North America in the coming months, this would not only have an impact on
the company, but on the German economy as a whole," he added. Volkswagen
sold nearly 600,000 cars in the United States last year, around 6 percent of
its 9.5 million global sales. The U.S. Environmental Protection Agency said the
company could face penalties of up to $18 billion, more than its entire
operating profit for last year.
Although such a fine would be more than
covered by the 21 billion euros ($24 billion) the company now holds in cash,
the scandal has raised fears of major job cuts. The broader concern for the
German government is that other car makers such as Daimler and BMW could suffer
fallout from the Volkswagen disaster. There is no indication of wrong doing on
the part of either company and some analysts said the wider impact would be
limited.
The German government said on Wednesday that
the auto industry would remain an "important pillar" for the economy
despite the deepening crisis surrounding Volkswagen. "It is a highly
innovative and very successful industry for Germany, with lots of jobs," a
spokeswoman for the economy ministry said.
But analysts warn that it is exactly this
dependency on the automobile sector that could become a threat to an economy
forecast to grow at 1.8 percent this year. Germany is already having to face up
to the slowdown in the Chinese economy. "Should automobile sales go down,
this could also hit suppliers and with them the whole economy," industry
expert Martin Gornig from the Berlin-based DIW think tank told Reuters.
In 2014, roughly 775,000 people worked in
the German automobile sector. This is nearly two percent of the whole
workforce. In addition, automobiles and car parts are Germany's most successful
export -- the sector sold goods worth more than 200 billion euros ($225
billion) to customers abroad in 2014, accounting for nearly a fifth of total
German exports.
"That's why this scandal is not a
trifle. The German economy has been hit at its core," said Michael
Huether, head of Germany's IW economic institute.
"MADE IN GERMANY". There are also
voices, however, that say the impact on the economy as a whole should not be
exaggerated. "I don't think that the German automobile industry will be
lumped altogether," Commerzbank chief economist Joerg Kraemer told
Reuters. "There won't be a recession just because of a single
company," Kraemer added. The German BGA trade association also tried to
calm the public by saying there were no signs that customers abroad were
starting to doubt quality and reliability of German companies.
"There isn't a general suspicion
against goods labeled 'Made in Germany'," BGA managing director Andre
Schwarz told Reuters. But he acknowledges there is a degree of concern among
German companies that the scandal over cheating on U.S. diesel emission could
have a domino effect on their businesses, eroding the cherished 'Made in
Germany' label. Some observers also see some irony in the scandal.
While the German economy defied the euro
zone debt crisis and, so far, the economic slowdown in China, it could now be
facing the biggest downside risk in a long while from one of its companies.
"The irony of all of this is that the threat could now come from the inside,
rather than from the outside," Brzeski said.
Πηγή: reuters.com
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