CNNFN writes article about What Volkswagen means to the German economy:
By Alanna Petroff @AlannaPetroff
How will Volkswagen fix emissions scandal?
How will Volkswagen fix emissions scandal?
The Volkswagen emissions scandal will cost billions and could tarnish the
entire German auto industry.
The company had made bold claims about being greener than other
automakers, and had a reputation for reliability and quality
engineering. Suddenly, the “Made in Germany” branding doesn’t look so
hot anymore after it apologized for cheating on diesel car emission
tests.
“If nobody else has done it, the damage would be limited. If it looks
like it’s more companies, not just Volkswagen, it would be a major
problem for the German car industry, and the German economy overall,”
said Theo Vermaelen, a finance professor at INSEAD.
Volkswagen (VLKAY) — which owns other top brands including
Porsche, Audi and Lamborghini — overtook Toyota (TM) as the
world’s top carmaker by sales in July, but that position is now at
risk, say analysts.
Here are seven key facts that show what’s at stake:
1. The Volkswagen group accounts for roughly one in 10 vehicles sold
globally*.
2. The auto industry is the largest industrial sector in Germany,
contributing about 2.7% to gross domestic product.
3. Some 20% of Germany’s exports are made up of vehicles and parts.
4. Domestic auto sales and exports were worth 368 billion euros ($411
billion) in 2014.
5. Most German auto sales came from the Volkswagen group, which
reported just over 202 billion euros in revenue in 2014.
6. Roughly 70% of Volkswagen vehicles are sold outside German borders.
7. Volkswagen employs nearly 600,000 people around the world, and more
than a third of the 775,000 people who work in the auto industry in
Germany.
But before you start worrying about the complete collapse of the German
auto industry, it’s worth repeating that — at least for now — the
scandal is limited to Volkswagen. Other German automakers such as
Daimler (DDAIF), which owns Mercedes-Benz, and BMW (BAMXY) have
said they’re not affected.
“Even a heavy drop in diesel car production and exports would probably
not subtract more than 0.2% from German GDP,” said Berenberg economist
Holger Schmieding. “Demand for non-diesel cars may rise and partly
offset the drop in demand for diesel-powered cars.”
* Source: Euromonitor International
— Ivana Kottasova contributed to this article
CNNMoney (London) September 22, 2015: 11:44 AM ET
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