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Germany’s Angela Merkel Looks To Electrification As Future Of German Auto Industry

Air Quality

Published on August 15th, 2017
by Kyle Field


August 15th, 2017 by  

German Chancellor Angela Merkel is cranking up the pressure on the German auto industry as it seeks to reorganize coming out of the diesel emissions scandals that shook its foundations. The strong push comes as Merkel seeks re-election and has recognized the mounting global market pressures that are coming to bear on the largely internal combustion–based German auto industry.

In her latest statements, Merkel has for the first time floated the idea of bans on petrol and diesel vehicles. This is a significant step in an EV direction that could lead to massive changes in the German auto industry. In particular, she stated that “a ban of ICE cars could be an option.” Such policy would not come till October — after the election — but the change in rhetoric was surely not taken lightly.

Merkel also slammed the German auto industry for past actions to deceive regulators and consumers, and she put the pressure on them to clean up their image through genuine change.

“Large sections of the auto industry have gambled away unbelievable amounts of trust,” she stated in her speech in Dortmund. “This is trust that only the auto industry can restore. And when I say ‘the industry’ that is the company leaders.”

The crowd rewarded her with strong applause.

The question raised by Merkel’s renewed interest in the electrification of the German auto industry is whether or not her interest in electrifying German personal transportation is purely a ploy to get re-elected on September 24th or if it is a genuine concern in response to mounting global market pressures as consumers migrate to luxury electric vehicles*. With the German automobile industry dominated by luxury auto companies like Mercedes-Benz, BMW, and Audi, this is perhaps the portion of the global auto market most facing existential threat right now from Tesla and a quick trend in favor of premium electric vehicles.

The push may has less to do with setting the German auto industry up as a leader in combatting climate change or in setting new standards for air quality and more to do with simple economics. With 900,000 Germans directly employed in the auto industry and global markets set to pivot to electric vehicles rapidly over the next 5 years, it seems Merkel is, in all actuality, largely making an economic play — after years of delay in pushing the industry to move to zero-emissions models. Fortunately for the rest of the world, her ploy just happens to be in line with what the planet needs*.

Politics operate differently in Germany than they do in the US, as Merkel is not in the pockets of the German auto industry and can enact regulation that will force the turning of the rudder, causing the entire industry to pivot towards electrification.

However, she is not alone in her push for the electrification of the automotive industry, as the opposition candidate has also announced a carefully crafted plan to overhaul the German automotive industry, including specific production quotas for electric vehicles, something recently promoted by Germany’s deputy economy minister, Matthias Machnig. Merkel’s plan takes a different approach but both address the fact that the industry needs to pivot in a new direction.

As we all know too well, though, what is said on the campaign trail often stays on the campaign trail. We’ll have to wait to see what policies are enacted … once we see who wins the election next month.

*James Wimberley highlights that this is less likely a political ploy than a real shift in policy intentions:

“Merkel is headed for an election victory that will leave her in a stronger position than before vis-a-vis her junior coalition partner in the SPD. The latter are rooted in the labour movement, and defend jobs in coalmining and car manufacturing. She does not need to make gestures on EVs to win comfortably, so we should take her statements as real policy intentions.”

A German familiar with the industry and Germany politics confirms to us this is an accurate take. James adds:

“Merkel’s German doctorate from Leipzig University (between an M.Sc. and a Ph.D) is in quantum chemistry. Like Thatcher she genuinely understands the science of climate change and air pollution. My hope and expectation is that she will use her renewed mandate to speed up the Energiewende again after the slowdown under SPD and industry pressure. She is still a skilled politician; German carmakers have moved a lot towards the EV transition in the last few years, and are far less likely to oppose a stronger EV policy.

However, another commenter (“Jake“) notes a more critical stance on Merkel, including the tack taken by her top political opponent. He highlights a translation from the German article linked above:

“At the end of last week Merkel’s challenger in the election campaign, SPD leader Martin Schulz, had presented a five-point plan and announced the introduction of a pan-European electric car quota in the event of an election victory. Merkel rejected such a quota, because other drive technologies would be disadvantaged. Schulz on Monday cast Merkel as being previously conceptlessness in the car crisis: ‘On the weekend she rejected a quota for electric cars, today she calls a diesel ban. Ms Merkel has no plans for the German automotive industry.’ With her statement, the Chancellor was unsettling the affected diesel drivers. They now needed the assurance that the state would help them limit the damage inflicted by irresponsible automanagers.”

This article has been updated after publishing to add and adjust context.

Check out our new 93-page EV report, based on over 2,000 surveys collected from EV drivers in 49 of 50 US states, 26 European countries, and 9 Canadian provinces.

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About the Author

I’m a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. TSLA investor. Tesla referral link:

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SMMT: Automotive industry ‘of particular importance’ in Brexit trade deal proposals

A Government proposal praised by the Society of Motor Manufacturers Traders (SMMT) has been shot down by a European Parliament Brexit negotiator as ‘a fantasy’.

The ‘innovative and untested’ approach would mean that despite levies, imports coming into the UK from the EU would not be subject to a customs border, and that there would be “as few additional requirements on EU trade as possible”, allowing ‘frictionless trade’.

EU officials’ rejection of the proposal, which suggests a temporary arrangement similar to the one the UK benefits from as a member of the EU’s Customs Union, brings the UK a step closer to the ‘hard’ Brexit and cliff-edge withdrawal from the single market that Brexit sceptics, as well as Hawes, fear. 

Negotiations over the details of Brexit must be completed by the end of March 2019.

The SMMT has scrutinised deals negotiated by other countries on the fringes of the EU (Norway, Switzerland and Turkey) and found that none would offer the market conditions that had helped to bring the UK its automotive success in the past five years. “It’s imperative that the Government remembers this when negotiating. It’s the key to everything,” Hawes said after the referendum result.

Hawes’ views were mirrored by the European Association of Automotive Suppliers (CLEPA), the secretary general of which, Sigrid de Vries, said: “The EU single market represents a fundamental driver of global competitiveness. Vehicle manufacturers and component suppliers are entangled in a highly integrated manufacturing network spanning Europe.

“Tariff and burden-free market access, as well as a stable and predictable regulatory framework, are crucial instruments to sustain the supplier industry’s technology leadership and secure investments and jobs.”

Speaking in response to today’s proposal, Hawes said: “It is encouraging that the Government recognises the need for interim arrangements which must be in place until the new relationship with our biggest trading partner is implemented.

”The automotive industry needs certainty to attract investment and make planning decisions, so such a move, if agreed by the EU, would take some time pressure off these difficult negotiations.

“It is also reassuring to see the Government recognise the particular importance of customs arrangements to sectors such as automotive which are subject to rules of origin requirements and operate ‘just in time’ processes. However, to maintain frictionless trade and ensure business only has to adjust to one change, interim arrangements must retain membership of a customs union with the EU and full participation in the single market.

“Any other arrangement risks additional administration, delays and costs, undermining the competitiveness of UK exporters and increasing the costs of imports. We will continue to work with the Government to try and avoid such an outcome.”

Read more: 

UK car success under threat from Brexit, says industry

UK car industry: Brexit deal among automotive priorities for next government

Brexit could harm UK car industry growth

Leading EU automotive bodies warn of potential Brexit damage

Article source:

Directions in Australia’s Automotive Industry report published

The first comprehensive analysis of the nation’s automotive industry in three years, launched today by Senator Nick Xenophon at Parliament House, Canberra, explores the full scope of the industry.

At a time of unprecedented change, the report uncovers the automotive industry’s economic contribution to the nation, business operating conditions, and detailed analysis of skills shortages and training requirements, along with insights into the direction automotive is headed.

“A key finding in the report is that Australia’s automotive industry is here to stay. Passenger vehicle manufacturing will cease in October this year, but that is, and always has been, a small component of the entire automotive industry, which is still very robust with 69,365 businesses operating across the country,” said VACC Executive Director, Geoff Gwilym.

Key findings:

  • The automotive industry contributes $37.1 billion to the Australian economy (2.2 percent of GDP).
  • Automotive repair and maintenance businesses account for 54.0 percent of the automotive industry; the next largest sector is motor vehicle retailing at 8.3 percent.
  • Automotive vehicle and parts manufacturing accounts for 4.4 percent of the industry.
  • 96.5 percent of automotive businesses are small and family run enterprises.
  • 41.9 percent of auto businesses are run by sole proprietors; 54.6 percent employ 1-19 employees.
  • The average age of Australia’s vehicle fleet is 10.1 years.
  • 800,000 registered vehicles (excluding motorcycles) were scrapped between 2015 and 2016.
  • Profit margins for repair/maintenance businesses in 2015/16 was 12.2 percent; fuel retailing was 2.4 percent.
  • There are 69 vehicle marques operating in Australia, amongst the most in the world.
  • Car dealers operate on 2.6 percent profit margins, automotive employs 379,365 people, and electric vehicles make up 0.01 percent of the nation’s fleet, a new report into Australia’s automotive industry reveals. 
Report author Steve Bletsos

 Directions in Australia’s Automotive Industry: An Industry Report 2017  is a must-read for all automotive business owners seeking to know what lies ahead for the industry and their business over the next three years. 

The report provides detailed insight into key sectors of the automotive industry and answers key questions including:

  • ·       Will the industry endure and in what form after the end of car manufacturing?
  • ·       How important is the automotive industry to the Australian economy?
  • ·       What trends are impacting on key sectors of the automotive industry?
  • ·       Where is the industry headed over the next few years?
  • ·       How can automotive businesses prepare for the future?


The report costs: $90.00 for VACC/MTA members (includes GST, postage handling). Non-member price is $309.00 (incl. GST, postage handling) visit VACC for more details.


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Automotive Industry: Indonesia Plans to Cut Tax for Sedan Sales

Stakeholders argue that Indonesia has been missing out on opportunities because there exists great demand for sedan vehicles, especially abroad (it is estimated that about 80 percent of the world’s drivers use a sedan vehicle). However, sedan manufacturing activities have been declining in Indonesia over the past couple of years due to slowing demand.

Meanwhile, the relatively high price for sedans in Indonesia undermines the attractiveness for car-makers to invest in sedan production facilities in Southeast Asia’s largest economy. Considering Indonesia aims to become the region’s biggest car manufacturing hub (implying it needs to overtake Thailand), a more conducive tax policy regarding sedan vehicles would be a step in the right direction. Currently, Indonesia mostly produces the multiple-purpose vehicle (MPV), for which there exists great demand in Indonesia. These MPV units carry a 10-20 percent tax tariff.

Goro Ekanto, Head of Revenue Policy Assessment at Indonesia’s Finance Ministry’s Fiscal Policy Office, said the government will soon send a revision of the Value Added Tax and Luxury-Goods Sales Tax Law to the House of Representatives (DPR) for approval. This proposal includes the plan to cut the sales tax for sedans. More details are not disclosed at this stage.

Currently, Indonesia charges a 30 percent luxury goods tax on sales of sedan vehicles that are equipped with a cylinder capacity of up to 1,500 cubic centimeter (cc), while sales of 1,500-3,000 cc sedan units are taxed at 40 percent. In contrast, sales of smaller MPVs are currently taxed at 10 percent, while larger MPV vehicles are taxed at 20 percent.

Read more: Overview of Indonesia’s Automotive Industry Market

Another incentive that is often proposed by stakeholders is to provide tax incentives for imports of basic materials that are used for the manufacturing of those sedan units that will be exported abroad.

In 2016, sedan vehicles only accounted for roughly 2 percent of the total of 1.1 million cars that were sold in Indonesia.



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Reforming Malaysia’s automotive industry

MALAYSIA has always responded to globalisation challenges, but the lack of appetite for structural reforms evidently decelerated after the government’s intervention in heavy industries, starting in the mid-1980s. In the past, real reforms have been put on hold to nurture the Malaysian automotive industry but it is a different era altogether today.

This author believes the Malaysian automotive industry is fast becoming a mature market.

There are five reasons why the growth of the Malaysian automotive market is going to be a very challenging one in the future:

FIRST, the Malaysian automotive market is small and has reached a plateau at about 31 per cent that of Italy’s, which is the world’s 10th largest;

SECOND, the country has a small road network of about only 144,000km in total and further road network expansion would take a very long time and massive investments;

THIRD, Malaysia has a relatively small population of 32 million people for an automotive company to be overly dependent on domestic sales alone;

FOURTH, without a sound export market, particularly to the left-hand drive countries, the Malaysian automotive export is confined to right-hand drive markets that do not have a strong local presence, with the exception of Japan and India; and,

FIFTH, Malaysia is experiencing a high household debt-to-gross domestic product ratio of 88.5 per cent, which means credit-tightening on car loans is inevitable.

The recent venture between Zhejiang Geely Holding Group and Proton Holdings Bhd is a step in the right direction. The public seems to be excessively concerned with the 49.9 per cent investment in Proton, but this author finds it acceptable if Geely were to control a majority stake instead.

Now that Proton is back to contract manufacturing mode — its initial strategy to profitability — the next step is to address the next big thing in the Malaysian automotive industry: the open approved permit (AP) system.

The National Automotive Policy review in 2009 stated that the Open AP system, which allows importation of used cars, should have been terminated by Dec 31, 2015, while Franchise AP, issued to franchise car brands’ holders, was to be phased out by Dec 31, 2020. Over the years, however, the International Trade and Industry Ministry had decided to maintain existing automotive import mechanisms albeit with minor policy tweaks.

The initial justification to adopt and maintain the present AP systems was to build Bumiputeras’ capacity in the automotive industry, in which many of them have become successful entrepreneurs. Besides, the system can no longer address the car affordability issue as in the past, as most cars imported via the Open AP system catered for the high-end market more than in others.

The AP system’s future has been a hot-button issue not only because of the deadweight loss resulting from perpetuation of automotive import policy since 1980s but, more importantly, it is inconsistent with our obligations at the multilateral level.

In line with Malaysia’s commitment to the World Trade Organisation, the present import licensing/AP mechanisms, excise duties and other non-tax measures in the automotive sector should be phased out in the near term.

The importation of used cars exposes the country to degradation of road safety. The Open AP system allows the importation of used cars that are lower in value in other countries while fictitiously extends the life cycle of cars beyond the net book value once imported into our market. Carbon emissions are also notably higher in used and aged cars than in brand new ones.

The ceiling approval of Open AP is based on 10 per cent of the country’s total industry volume (TIV). According to the Malaysian Automotive Institute, Malaysia’s average annual TIV in 2010 to last year was 628,873 and, in theory, the total Open AP allocation in the said period was 62,887 a year. Since 2010, the government has imposed a fee on each Open AP of RM10,000 and, as such, the total collection of Open AP fees in 2010 last year should be around RM4.4 billion.

The way forward is for the government to address compliance and enforcement issues of the Open AP system where it matters the most. The onus is on AP holders to sell cars and nothing else.

This can be done by making it obligatory for AP holders to clear stocks within the calendar year or risk facing a reduction in AP allocation in the following year. In addition, the present AP fee of RM10,000 to Open AP holders can be further strengthened by imposing an upfront payment upon approval.

Granted, reforming Malaysia’s automotive industry is not as simple as going from point A to B. Transport technologies will change the way we commute in the future and car ownership may soon be a thing of the past. As such, there must be proper systems in place so that reforms can be done in a steady and timely manner without having to wait for external pressure to overcome political resistance and push for reforms.

**The writer is Director of Economics, Trade and Regional Integration, Institute of Strategic and International Studies (ISIS) Malaysia

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No engines, no oil, no radiators. How the auto industry is becoming …

A short walk from Melbourne’s shining office towers is a narrow thoroughfare Gladstone Street where five kindred businesses are squeezed into a single block.

From the outside they are brick and concrete slabs, with no-fuss signage and heavy roller doors. Take a look inside any one of them, though, and there’s the thumping pulse of an industry at work. There is a shop that specialises in Holdens, another that repairs cars from the ’80s. There’s a garage that services motorcycles and another that does roadworthy inspections. 

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“Everyone has a little niche and everyone is kept busy,” says Tony Sanchez, whose company specialises in auto electric repairs and European cars, but can work on just about anything.

“Anything from a Hyundai to a Jaguar, whatever comes through the door.”

ALS Automotive is bigger than your average workshop, with 420 square metres of floor space, a front office and a change room out the back. Among the two dozen cars inside today is a Volkswagen that needs $2500 of work, a diesel-engine Volvo and an Audi with a busted air-conditioner.

When Australians think about the automotive industry, what often comes to mind are images of iconic car makers and thier once-bustling factories in Broadmeadows, Geelong or Adelaide, operated by generations of blue-collar workers for more than a century.

Now, as Holden prepares to roll the final Australian-made passenger vehicle off its production line in October, a new national report has attempted to answer a very important question: what will our automotive industry look like next?

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The can be little doubt, according to the research from the Victorian Automobile Chamber of Commerce, that the industry is about to “enter a new phase, as a new entity and with a new direction”.

A hundred years of passenger car manufacturing will soon be finished. In turn, component making will also be largely scaled back. And the slowly rising uptake of electric and autonomous vehicles will disrupt business models to a “degree never witnessed before”.

But, says the report, the decline of the factories and unprecedented change does not spell the end for the industry as a whole, which will remain robust, with more than 68,000 automotive retail, repair and services businesses.

Yes, the sector will be scaled back somewhat – just not as much as one might think.

“A key finding in the report is that Australia’s automotive industry is here to stay,” says VACC executive director Geoff Gwilym.

“Passenger vehicle manufacturing will cease … but that is, and always has been, a small component of the entire automotive industry.”

The automotive industry, the report says, contributes $37.1 billion to Australia’s economy, or 2.2 per cent of GDP. This will decline by about $2 billion to 2.1 per cent of GDP after the manufacturing exit in October.

The industry employs 379,365 people. This will shrink by 15,000 people in the next three years.

Australia’s biggest publicly listed automotive retailer, Automotive Holdings Group,which has more than 100 dealerships across Australia and New Zealand, believes the industry is “evolving to meet its challenges”.

“It’s not only automotive retail,” AHG managing director John McConnell says. ”Other retail sectors are also facing a range of disruptive influences. But we are confident that opportunities will emerge with our existing and potentially new partners.

“Our scale and broad portfolio of products give us significant opportunity to work with the [manufacturers] and to maintain and improve our share of the market for new and used cars, service and repairs, and finance and insurance.”

Electric and autonomous vehicles will have drastically fewer moving parts, meaning they will require far less maintenance. Most of the maintenance will be done via computers.

“Eventually,” says Mr Sanchez, “they will be doing away with engines, doing away with oil, doing away with radiators, doing away with a hell of a lot of products that the industry relies on. Then they will be autonomous – and they will be doing away with tow trucks, there will no more panel beating, because they won’t be crashing.”

Mr Sanchez is 62. His industry has changed dramatically since ALS opened in 1979. Collision-warning systems. Rear cameras. Automatic headlights. Rain-sensing windscreen wipers. 

Like the other business owners in Gladstone Street, he has had to invest in retraining and sophisticated diagnostic equipment as a necessity to keep up, and now, he says, he is nearing the end of his working life.

“I live in a nice house, I have a nice car, I own this building … I’ve achieved what I’ve achieved because I’ve worked hard, provided good services and the auto industry has been good to me,” he says.

“I hope it continues to do that for other people, who can work hard and prosper.”

Article source:

Auto Suppliers: Beyond Chips And Systems

The semiconductor industry is revving up its present and future contributions to advanced driver-assistance systems and autonomous driving. Those areas represent tremendous growth opportunities for chips, modules, and software going into automotive electronics. There’s also the development of artificial intelligence and machine learning applications in automotive design, which are brand new commercial opportunities that have never existed in any market.

Still, there are a number of high-tech companies that provide products and services to the worldwide automotive industry that don’t design or make chips, and they don’t write software for customers.

Robert Bosch GmbH, also known as the Bosch Group, is ranked as the top supplier of OEM parts to the automotive industry, with $46.5 billion in 2016 sales. Bosch Rexroth, a Bosch Group unit, was an exhibitor at last month’s SEMICON West show in San Francisco. The company provides assembly technology, electric drives and controls, gear technology, industrial hydraulics, linear motion technology, mobile hydraulics, molding and casting technologies, tightening technology, and welding technology to multiple industries, including semiconductors and electronics.

ZF Friedrichshafen AG, Magna International Inc., Denso Corp., and Continental AG fill out the top five lineup of auto OEM parts suppliers around the world. All are involved in electronics, and some are developing artificial intelligence technology for automated driving, along with vehicle sensors and other components.

There are literally thousands of suppliers to the automotive industry. Most are not as well known as those five corporations. Some have been around for decades. Others are relative newcomers. But the big change underway now is that companies that previously played no part in the automotive supply chain—which until the recent introduction of advanced electronics for assisted and autonomous driving was considered cumbersome, slow and low margin—are now taking an active role.

The industrial gases business of the Linde Group provides a number of specialty gases to the electronics industry, including those for semiconductor manufacturing, and for the production of flat-panel displays, light-emitting diodes for solid-state lighting, and photovoltaic solar cells. Linde Electronics is a long-standing exhibitor at SEMICON West.

The Linde Group also provides a variety of products and services to the automotive industry. These include all-in-one welding, cleaning products, cryogenic gases for molded plastic and rubber components (along with tires), heat treatment processes, refrigerant supplies for mobile air conditioning systems, and thermal spray coating for surface finishes. There are also gases and supporting services for Euro 6 compliance, meeting emission requirements within the European Union.

“It’s a particular case of quality requirements being more stringent,” Paul Stockman, head of market development at Linde Electronics, said about the automotive industry. “The chips that are going into cars have become more responsible for either autonomous function or additional safety functions. The acceptable failure rate, obviously, is much, much lower. But also, the supply chain on these chips has to be guaranteed for a minimum of 20 to 30 years. So, that means the supply chain, as materials go, has much more stringent requirements. You can’t change suppliers as easily, and you need to have a supply chain and follow the manufacturing process over those 20 years.”

He added, “It’s still a developing area, but there are quality requirements being developed, specific to the production of semiconductor chips for automotive applications.”

Also exhibiting at SEMICON West was igus Inc., the American subsidiary of igus GmbH, headquartered in Cologne, Germany. The U.S. company is based in East Providence, R.I.

Igus was established in 1964 and originally focused on supplying complex technical polymer components. In 1983, igus began turning out reinforced plastic assemblies that it calls Energy Chain Systems and injection-molded polymer bearings. The company’s mission is to replace metal parts that can wear out with durable plastic parts that can stand up better to years of use. Plastic parts may not sound so durable. What igus actually makes are functionally advanced polymer components and assemblies. Its website has an e-commerce element for worldwide purchasing.

Igus provides its iglide brand plain bearings for cars, which go into a number of areas within the vehicle – convertible tops, windshield wipers, steering systems, seats, hinges, pedals, undercarriage, transmission, and the engine compartment. It also provides on-board systems for energy supply in a vehicle, serving headlights, interior systems, and powered windows.

The company is also involved in making energy chains (e-chains) for automotive manufacturing, providing energy supply systems for indoor cranes, robotic arms, and other aspects of production lines.

In addition, igus products are used in 3D printers, agricultural equipment, aviation, beverage production and packaging, bicycles, cameras, construction machinery, cranes, fitness/physical therapy equipment, food production and packaging, hydraulics and pneumatics, heavy machinery, machine tools, medical technology, vending machines, and woodworking.

Igus has an inventory of 28,000 different components, according to Stefan Kombuchen, head of marketing and corporate communications, and tests 1,500 to 2,500 new products each year. There are 100,000 components available online at

CoorsTek offers high-performance ceramic components to automotive manufacturers and OEM parts suppliers. It has ballistic door panels and chassis leveling valves for the chassis. It provides balls, bearings, seals, and valves for the powertrain.

On the electronics side, CoorsTek has automotive-grade ceramic substrates and components (including alumina and aluminum nitride substrates), carbon brushes for power motors, and automotive lighting components, such as laser components, light-emitting diode phosphors, and high-brightness LED substrates.

The company, which is owned by the Coors family of beer brewing fame, also offers ceramic sensing components for automotive applications – air conditioning sensors, fluid pressure and temperature sensors, and oxygen sensors in particular.

EAG Laboratories provides industrial goods testing and analysis for the automotive industry, among other markets.

Johnstech International supplies a variety of products for final testing of automotive devices, such as ball grid array sockets and contactors.

And Flex, the company formerly known as Flextronics, has its AGM Automotive subsidiary, which specializes in door lighting (door handle lighting, door lock indicators, light pipes, switches), instrument panels and floor consoles (compartment lighting, footwell lighting, light pipes, shift indicators and mechanisms), overhead systems (assist/grab handles, dome and rail lamps, overhead cargo lighting, overhead consoles), and textiles (carpet rolls, floor mats, trunk and cargo mats).

AGM has done business with Adam Opel, Audi, Fiat, Ford Motor, General Motors, Honda, Hyundai, Infiniti, Mercedes-Benz, Nissan, Porsche, Toyota Motor, and Volkswagen.

While Google, Intel, Nvidia, Qualcomm, and Tesla may grab all the headlines for autonomous vehicle technology, there are many other companies helping to put together the car of the future. And that list continues to grow, incorporating semiconductor IP, EDA tools, chips of all types, as well as advanced cabling and controller chips.

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Angela Merkel rival takes aim at German car chiefs

Martin Schulz, the main challenger to Chancellor Angela Merkel in Germany’s September election, has accused the country’s car industry executives of putting the sector at risk by failing to plan for the future.

The future of the automotive sector, Germany’s biggest exporter and provider of about 800,000 jobs, has become a hot election issue as politicians blame executives and each other for the industry’s battered reputation following the emissions scandal.

Schulz, leader of the left-leaning Social Democratic party (SPD), took aim at what he described as “irresponsible managers” in the sector. “The problem is, we are living through a situation in Germany in which managers worth millions at VW [Volkswagen], at Daimler, have fallen asleep and forgotten the future,” he told broadcaster ZDF.

The crisis in the sector blew up when Volkswagen admitted to cheating USemissions tests almost two years ago. VW, along with German manufacturers BMW, Daimler, Audi and Porsche, are also being investigated by European regulators for alleged anti-competitive collusion.

Seeking to restore the industry’s reputation, politicians – though not Merkel herself – and car bosses agreed earlier this month to overhaul engine software on 5.3m diesel cars to cut pollution.

The former chancellor Gerhard Schröder, himself a former member of VW’s supervisory board, accused Merkel of neglecting her duties by going on holiday rather than chairing the talks with industry bosses on diesel emissions. “I don’t want to spoil anyone’s holiday. But here I would have taken charge personally. It is all far too important,” Schröder, a Social Democrat who Merkel defeated in 2005, told Swiss tabloid newspaper Blick.

On Saturday, Merkel kicked off her re-election campaign with a stinging attack on German car chiefs, pressing them to innovate better to secure jobs, and win back trust lost thanks to the diesel emissions scandal.

Merkel, whose government has faced pressure for being too close to powerful carmakers, and Schulz are both concerned that the industry is being too slow to embrace electric cars.

An Emnid opinion poll for Sunday’s Bild am Sonntag weekly newspaper showed support for Merkel’s conservative bloc at 38%, unchanged from a week earlier, with the SPD gaining one point to 24%.

The two parties rule in a “grand coalition”. Although Merkel’s conservatives command a comfortable lead over their rivals, a fractured political landscape could make forming a power-sharing alliance with a smaller party difficult after the election.

Article source:

Auto industry fights for influence on NAFTA talks






Automakers say NAFTA has had tremendous benefits for the U.S. economy even though it led to some manufacturing job losses. The industry is open to “modernizing” NAFTA, but wants to block some proposals as the U.S. works to renegotiate the free trade agreement.
Brent Snavely, Detroit Free Press

Automakers are embracing the Trump administration’s decision to renegotiate the North American Free Trade Agreement as a rare opportunity to push for improvements to the trade deal that would benefit the industry but are concerned about some administration goals that could harm profits and jobs. 

Auto industry groups plan to be fully engaged in negotiations that start Wednesday and are expected to last six or seven months.

The automotive industry wants to be able to ship parts and vehicles back and forth across the border with less red tape, wants negotiators to understand that billions of dollars have been spent to develop a highly efficient North American manufacturing supply chain and is fighting to block any changes to the percentage of parts made in the originating country to qualify for tariff-free trade.

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“This is a once-in-a-generation — if not lifetime — opportunity to modernize the North American Free Trade Agreement,” Daniel Ujczo, a partner with Dickinson Wright and president of the Ohio-Canada Business Association told the Free Press. “These opportunities do not come around the corner too often. I think if we miss this opportunity … we may not have it again in my lifetime.”

Industry groups also say the existing trade deal, which was negotiated before the Internet and e-mail emerged as a way to conduct business, is outdated in many ways and is pushing a set of improvements to the way documentation is conducted and wants to ease restrictions on the ability to send teams of technicians across borders for short periods of time.

“If we don’t have these conversations again for another 20 years, we will have missed an opportunity,” said Ann Wilson, senior vice president of government affairs of the Motor Equipment Manufacturers Association.

Why does the opportunity exist? Because last year, both Donald Trump and former Democratic presidential candidate Bernie Sanders harnessed voter anger over manufacturing job losses, castigating NAFTA as the culprit and vowing to replace it.

More: Unions urge worker-friendly NAFTA re-do; industry urges ‘do no harm’

The auto industry also argues that Mexico provides the industry with an essential location for low-cost production and says NAFTA has ensured that North America, as a region, is competitive with other leading automotive regions across the world.

That puts industry groups directly at odds with unions that represent auto workers who find themselves oddly aligned with Trump and are also trying to seize the negotiations as an opportunity to push for better wages, benefits and worker rights for Mexican workers.

But industry groups have formed a unified front on most issues affecting the industry.

At least five industry groups representing automakers and suppliers, along with two labor unions that represent auto workers, filed position papers with the U.S. Trade Representative in June and testified during three days of hearings. They include Alliance of Automobile Manufacturers, American Automotive Policy Council, Global Automakers, Motor Equipment Manufacturers Association, Ohio Canada Business Association, the UAW and Unifor.


Here is a what the industry wants and doesn’t want from a new NAFTA agreement:

Protect the efficiency of North American automotive production: First and foremost, the industry argues that Mexico offers an essential location for low-cost automotive parts and vehicle production. Imposing tariffs or taking away duty-free imports from Mexico, they argue, would fail to bring jobs back to the U.S.

Instead, such policies would likely drive automakers farther away from the U.S. to produce more cars and car parts in places like China, Eastern Europe and South America. 

Boston Consulting Group, in a study published in July, said automakers are unlikely to build new plants in the U.S. unless a border tariff of up to 40% is imposed — a figure that is even higher than the most aggressive tariffs floated by Trump.

“NAFTA provides the U.S. with a source for competitively priced auto products in close proximity to final assembly,” the American Automotive Policy Council argued in its letter to the U.S. Trade Representative. “These products are not always cost competitive to manufacture or assemble solely in the United States.”

Also, auto sales hit a historic high in 2016 in the U.S. and are falling, and no automaker wants to build a new plant in that environment.

“We don’t want to go back to the times, before the auto bankruptcies, when we had excess capacity,” Wilson said. ”It was difficult for the workers, it was difficult for the companies, it was difficult for everybody.” 

But a recent decision by Japanese automakers Toyota and Mazda seems to contradict that argument.

The two automakers announced plans on Aug. 4 to build a $1.6-billion U.S. assembly plant that would create up to 4,000 jobs as part of an extensive new alliance. Toyota said it would make the Corolla sedan at the factory instead of in Mexico as previously intended. A location was not been announced.

Leave “rules of origin” alone: The auto industry doesn’t want the new NAFTA to include any changes to the “rules of origin” provision. What are rules of origin? Currently, to qualify for tariff-free exports from one country into another, at least 62.5% of the content of the car or truck must come from the country where it is assembled.

The negotiating principles released last month by the U.S. Trade Representative said the Trump administration wants to “update and strengthen the rules of origin, as necessary, to ensure that the benefits of NAFTA go to products genuinely made in the United States and North America.”

The Auto Alliance, which represents the Detroit Three as well as Asian and German automakers, says the 62.5% threshold is already “the highest of any U.S. trade agreement.”

The American Automotive Policy Council argues the current threshold provides the right balance.

“It is neither too easy to meet — by allowing free riders to enjoy the benefits of the NAFTA agreement without making the necessary investments — nor too stringent, which could prevent those invested in North America from enjoying the duty-free benefits of the agreement.”

Mexico isn’t a back door for Chinese auto parts: One of the reasons the Trump administration wants to strengthen rules of origin is because of the belief that some parts made outside of North America are imported into Mexico and then shipped into the U.S. 

But the American Policy Council says less than 6% of the value of auto parts consumed in the U.S. are imported from China.

During the hearings, “A lot of time was used to dispel the myth that China is not using Mexico as a back door to the U.S. What in my view (the Trump administration) is looking to do from NAFTA is make sure Mexico and Canada are not back doors for goods for China,” Ujczo said.

Don’t worry about trade deficits: The Trump administration wants to shrink America’s trade deficit with Mexico, viewing it as a sign of weakness of the U.S. economy.

“For the first time the United States Trade Representative has included deficit reduction as a specific objective for the NAFTA negotiations,” the office said in a statement in July.  ”Since NAFTA was implemented in 1994, the U.S. bilateral goods trade balance with Mexico has gone from a $1.3 billion surplus to a $64 billion deficit in 2016.”

But the auto industry argues that a trade deficit isn’t necessarily bad for the U.S. economy.

“Much attention has been paid to how the U.S. runs a trade deficit in auto parts with Mexico. However, similarly, Germany runs a large trade deficit in auto parts with Eastern Europe,” the American Automotive Policy Council said. “Both the U.S. and Germany enhance global competitiveness by strategically using lower cost inputs for high labor content components.”

Convince Mexico to adopt U.S. Federal Motor Vehicle Safety Standards: Canada and the U.S. largely require cars and trucks to meet the same regulations, but Mexico does not. The auto industry would like the new agreement to require Mexico to adopt something close to U.S. federal motor vehicle safety standards.

This, the industry argues, would streamline the manufacturing process for automakers selling cars in Mexico, cut down on costs and improve safety for Mexican consumers.

“We recommend the U.S. utilize this opportunity to formally enshrine existing practice and include commitments in the agreement requiring Canada and Mexico to recognize Federal Motor Vehicle Safety Standards,” the Auto Alliance said in a letter to the U.S. Trade Representative last month.

Training for U.S. workers: This is the one area where the industry, administration and labor unions share common ground. There is a recognition that NAFTA, and America, failed to put adequate worker retraining programs in place to help manufacturing workers displaced by free trade and automation into other jobs and careers.

In fact, the emerging manufacturing jobs in the U.S. tend to require more skills and training than the training programs of the past.

“I don’t think a new NAFTA will get through Congress without some sort of workforce, skills training provision,” Ujczo said. “If it comes about as something just about companies and not about people, I don’t think it gets through Congress.”

In June, Trump signed an executive order in June to substantially increase the number of U.S. apprenticeships from the current 500,000 by doubling the amount the government spends on apprenticeship programs — a move welcomed by the auto industry.

“We would like to see something that maybe moves in parallel with NAFTA that addresses some of our workforce issues,” Wilson said.

Stronger labor regulations: The UAW and Unifor want stronger labor law protections for workers and want Mexican workers to have stronger union rights. While most Mexican manufacturing workers members of labor unions it is illegal for unions to call a strike and workers who go on strike can be fired. The unions also have little bargaining power when it comes to contracts.

“For far too long successive Mexican governments have failed to protect and advance workers’ fundamental rights and auto companies have been all too willing to reap the windfall of repressed wages and weak standards,” the UAW and Unifor said in a joint statement in July.

The NAFTA negotiating principles announced in July by the Trump administration includes as its goal the inclusion of labor regulations in the main agreement rather than as a side agreement.

The goal in those principles is for “NAFTA countries to adopt and maintain in their laws and practices the internationally recognized core labor standards as recognized in the (International Labor Organization) Declaration, including: Freedom of association and the effective recognition of the right to collective bargaining.” 

Contact Brent Snavely: 313-222-6512 or Follow him on Twitter @BrentSnavely.

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Mahindra and Mahindra: Driving the change in India’s automotive industry

MM | Established in 1945

The origin

Starting life as a steel trading company in Ludhiana in 1945, MM was then Mahindra Mohammed, the company had been founded by brothers K.C. and J.C. Mahindra and their partner, Malik Ghulam Mohammed. But after India became independent, Ghulam Mohammed emigrated to Pakistan, becoming that country’s first finance minister. Soon after, in 1948, the company was renamed Mahindra Mahindra.

Stepping stone

Mahindra Mahindra’s growth story is closely linked to the development of India’s own automotive industry, especially when it comes to the multi-utility (MUV) and sports utility vehicle (SUV) segments. The company then saw a business opportunity in the larger MUV segment, eventually expanding into the manufacture and sale of such vehicles. This phase of its business activity began with MM gaining the licence to assemble the Willys Jeep in India in 1947. Soon established as the foremost Jeep manufacturer in India, the company leveraged its experience with vehicles of this class and began to manufacture light commercial vehicles (LCVs) and agricultural tractors. Over the past few years, MM has also taken a keen interest in new industries and in foreign markets. In India, it entered the two-wheeler segment by taking over Kinetic Motors. MM also has a controlling stake in the REVA Electric Car Company, and in 2011, acquired South Korea’s SsangYong Motor Company. In 2010-11, the company also made a foray into the micro drip irrigation sector with the takeover of EPC Industries in Nashik. Meanwhile, the $19 billion Mahindra Group, of which MM is one part, also has commercial interests in aerospace, auto components, defence, financial services, IT and hospitality.

Leading role

The current chairman of the Mahindra Group, Anand Mahindra, has also served on the board of India’s National Stock Exchange and the World Bank Group’s advisory board for doing business. MM is currently led by managing director Pawan Goenka, who first joined the group as general manager for RD. During this time, he was closely involved in the development of the Scorpio, India’s first indigenously built suburban utility vehicle.

DID YOU KNOW?: Mahindra Mahindra began importing the Willys Jeep which saw a great deal of use during the Second World War in 1947

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