Germany relies on ‘Vorsprung durch Technik'

shonguiz · 10-25-2007, 04:16 PM

Germany relies on ‘Vorsprung durch Technik'

Von Richard Milne

Quote:

The German manufacturers may not always be the fastest-moving but when they get hold of an idea they often will not let go.
Every news article about Germany boils down, according to journalistic wisdom, to one question: is the country changing or not? Viewed through this lens, what is taking place in Germany's automotive industry is highly illuminating.

All big carmakers have recently changed or are on the verge of changing strategy. DaimlerChrysler has backed out of mass-market cars while Porsche has entered through its control of Volkswagen. In turn VW has dramatically switched course from relentless cost-cutting to a focus on volume growth. Even BMW, often seen as the most stable and conservative manufacturer, is preparing to set out a new strategy in October.

"The car industry is in many ways emblematic of Germany: it is changing," says Stephen Cheetham, analyst at Sanford Bernstein, the analysis group, in London. "But the real question is has it changed enough to become a reformed alcoholic or is it still just the same old boozy industry as before?"

The reasons for the changes are as varied as the manufacturers themselves, and range from boardroom politics at VW to creating a family legacy at Porsche. But a couple of common themes underpin the changes.

One is German pragmatism. The German manufacturers may not always be the fastest-moving or excel in marketing themselves, but when they get hold of an idea they often will not let go. One example is wage deals where - despite being the highest-paid car workers in the world - "German employees saw which way the wind was blowing and so real wages have actually fallen in the past few years," as Mr Cheetham says.

Another driver for change currently - and an area where German pragmatism is again being shown - is the debate over reducing carbon dioxide emissions. As many executives such as Michael Ganal, head of sales at BMW, admit, German carmakers allowed themselves to be outflanked initially in the marketing battle. The products of Japanese companies such as Toyota and Honda have established themselves in consumers' minds as much more environmentally friendly than German gas guzzlers.

But slowly the Germans are fighting back - and the way they know best: through technology. VW already has the Polo Blue Motion, which has lower emissions than the environmentalists' poster car, the Toyota Prius hybrid. It will present a Golf Blue Motion at the Frankfurt show. Mercedes is proudly touting the value of its clean diesel engines. And BMW is among the companies going the furthest, making huge play of its "efficient dynamics" solutions.

"Never underestimate a German's ability to find a technical solution," says Thomas Weber, head of research and development at DaimlerChrysler.

Still that is not a guarantee for success, as a BMW official admits: "The Germans are very engineering-driven: ‘Done that, solved that'. The Americans, and some Japanese, are more: ‘How can I make a buck from that?'"

These drivers are starting to find their way not just into products but entire company strategies. BMW is perhaps the most interesting in this respect, partly because it is the one large manufacturer not to have changed course so far and partly because it has been thinking about it for so long. When Helmut Panke was replaced as chief executive by Norbert Reithofer a year ago at the luxury manufacturer, the incoming head was given a task by the supervisory board.

"We said: ‘Go and come up with a new strategy. You have a year but we want you to look at absolutely everything'. We were worried that BMW had become somewhat complacent and ignored - a little - the threat from competitors such as Audi," says a supervisory board member.

An executive says: "This is a well-managed company but sometimes you just have to shake things up and say the world is changing faster than we think."

It is unclear how radical the changes will be - one official talks of a new "blueprint" not a new strategy - but everything has been considered and a vision for the next 10-15 years should be set out in October.

"What cars will the Chinese be driving in 10 years? What will energy prices be like? What size boots will people want in different models? Do we need another brand to reach all the customers we are targeting?" asks an official rhetorically.

Such thinking has led to an explosion of models, not just at BMW but also across the German car industry. BMW has gone from its "three sausages" strategy of the 3-, 5- and 7-series to soon having 10 models. Porsche will soon have four rather than its traditional one while VW is aggressively expanding into as many niches as possible.

The success of that expansion against similar pushes from carmakers worldwide will demonstrate how successful and radical the changes have been - and just how reformed the alcoholic is.

- ONLY REGISTERED AND ACTIVATED USERS CAN SEE ALL LINKS - CLICK HERE TO REGISTER

cawimmer430 · 10-26-2007, 09:21 AM

"The products of Japanese companies such as Toyota and Honda have established themselves in consumers' minds as much more environmentally friendly than German gas guzzlers."

I assume this was written by an American source?

There are tons of fuel-efficient and environmentally friendly German cars in Europe, Asia and other markets. The problem is that if you sell these "underpowered and slow" cars in the US, uninformed consumers (who think luxury cars need to be fast because Car and Driver etc. says so...) will throw fits because it doesn't fit in with their concept of luxury and performance.

If the demand is there, German manufacturers could eventually bring over these models to the US. Also, all German brands in the US are luxury, even Volkswagen has upped their image where it could be considered a "premium mainstream" brand. You can't compare German luxury cars to Japanese economy cars, notably their mainstream hybrids. As far as the Japanese luxury hybrids go, namely Lexus, to me it's all HYPE. Unless you spend the majority of your driving time in the city, a Lexus hybrid won't really deliver impressive fuel economy.

I myself have stated many times that I find a C180 Kompressor more appealing and desirable than a C63 AMG for example. I like to be realistic and that's more car than I'll ever need (the C180K). But that's just me.

10-26-2007, 09:21 AM	#2
cawimmer430 Contributor Join Date: Oct 2005 Location: Mühldorf am Inn, Germany Posts: 8,028 Thanks: 3,975 Thanked 3,189 Times in 1,366 Posts	Re: Germany relies on ‘Vorsprung durch Technik' *"The products of Japanese companies such as Toyota and Honda have established themselves in consumers' minds as much more environmentally friendly than German gas guzzlers."* I assume this was written by an American source? There are tons of fuel-efficient and environmentally friendly German cars in Europe, Asia and other markets. The problem is that if you sell these "underpowered and slow" cars in the US, uninformed consumers (who think luxury cars need to be fast because Car and Driver etc. says so...) will throw fits because it doesn't fit in with their concept of luxury and performance. If the demand is there, German manufacturers could eventually bring over these models to the US. Also, all German brands in the US are luxury, even Volkswagen has upped their image where it could be considered a "premium mainstream" brand. You can't compare German luxury cars to Japanese economy cars, notably their mainstream hybrids. As far as the Japanese luxury hybrids go, namely Lexus, to me it's all HYPE. Unless you spend the majority of your driving time in the city, a Lexus hybrid won't really deliver impressive fuel economy. I myself have stated many times that I find a C180 Kompressor more appealing and desirable than a C63 AMG for example. I like to be realistic and that's more car than I'll ever need (the C180K). But that's just me.

Thread Tools
Show Printable Version Email this Page
Display Modes
Linear Mode Switch to Hybrid Mode Switch to Threaded Mode