Tuesday, July 30, 2013

The Business of Cars

This is one of those odd German business stories.

Right now in Europe.....most all European car companies are suffering.  While state-by-state economies are stumbling, there's basically only one country with a robust economy, and selling cars that they manufacture....Germany.  Porsche, Mercedes, BMW, Audi, Volkswagen, and even Opel....are all doing well.

As part of the bigger picture....each of these companies sell across the border into various other European countries, and there in.....lies the essential problem.

France over the past couple of years is in a miserable economic stumble.  You could have predicted the stumble, but the government has taken several measures which simply delayed any real recovery.  So the French are sitting there....with a car market that is stalled.  If you owned a six-year old car and you were French....there's good odds that you might try to hold onto this car for a while, and delay a new car purchase.  What the French government doesn't want to see.....is you get this five-year urge to hold onto a car a lot longer than what they'd expect.

So the Germans are prepared to introduce some new Mercedes into France....on the high-scale end.  Normally, the French would just wave their hand, and it'd be allowed.  This time?  No.  They've cooked up a fairly legit excuse that the air conditioning system on-board these newer model Mercedes.....is terrible for the environment.

The German reaction?  Well...carefully, they've stepped around what is a legit complaint.  Yeah, this might be true, and maybe they should have put a lousy but friendly environmental AC unit in each car.  But they didn't.  And the bigger issue is that 95-percent (at least the Germans say this but it's open to debate) of French cars.....have the unfriendly AC unit in them.  The German feeling is that let's just keep moving forward.

The French want to lessen competition and give their two car companies a real chance to compete, so this is the trick-card that they've chosen to use.  For the Germans....sadly....the EU is now involved, and they've been the ones pushing the lousy new environmentally-friendly AC units.  It's hard to say if the Germans have a leg to stand on....once the EU does their fancy dancing over this topic.

The problem currently?  If you were a rich French guy and wanted to go upscale and drive a precision German-made car....you're screwed and you'd just sit with a order that may never get delivered.  I suspect the French government is expecting that.  And so, you'd make the simple decision....if you can't buy an upscale German car.....maybe you'd buy an upscale French car.

It's a comical way of managing an economy.  Limited car sales, forced car purchases, all in the name of environmental strategy.

Now, if the Germans could only think of some nifty environmental French wine violations.....they could twist this around and really make this an interesting economical policy.

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