There’s a cartel between German car makers – and it’s pretty bad

The Spiegel, in English (link at the end of the post, via Guillaume de Calignon):

Daimler, BMW, Audi, Porsche and Volkswagen often no longer compete with one another. Instead, they secretly cooperate, very closely, in fact, in the same way one would normally expect of the subsidiaries of a single company to work together, as something like a “German Cars Inc.” — or a cartel. […]

The agreements among the German automakers likely constitute one of the biggest cartel cases in German industrial history.

And this cartel isn’t something new:

Daimler, BMW, Volkswagen, Audi and Porsche have coordinated matters relating to the development of their vehicles, costs, suppliers and markets “for many years — at least since the 1990s and to this day.”

As usual with a cartel, there’s a long list of losers:

The secret agreements are also detrimental to customers, who buy German vehicles because, among other things, they expect to be getting the best possible products from a technical standpoint. But how can a company produce the best if competition is curbed, and if the engineers stop doing their utmost to outdo the engineers working for other brands?

And then there are the millions of owners of diesel cars. In an almost bizarre way, they too are victims of the German auto cartel. For the first time, there is proof that it was agreements among these five automakers that ultimately ensured that emissions from diesel vehicles were not cleaned as effectively as would have been technically possible. This all began with the cartel of the five automakers.

Diesel buyers are now left with the damage. They face the prospect of no longer being allowed to drive their cars in cities, and of suffering significant losses when selling the vehicles. Shareholders are also among the victims. Penalties for cartel violations weaken the companies in which they hold shares and can lead to declining share prices. Suppliers are also adversely affected, as is almost always the case with cartel agreements. If the five German automakers agree to buy from only one company, others stand no chance of securing orders.

The cost of this cartel, considering how long it existed and the number of companies involved (basically, all of them), is probably extremely high. And it’ll rise even further with the fines and the damages it’ll create to the industry’s image:

The cartel of German automakers could […] face fines in the billions. And the industry’s image, which has already suffered considerably from the diesel scandal, will be damaged even further.

Now this cartel is exposed, I wonder why it have survived for such a long period. Who knew? Were some people in the government aware that things were over the legal edge with cars manufacturers? It raises real questions, and I wouldn’t be surprised to discover that the story of this cartel isn’t over…

The Cartel: Collusion Between Germany’s Biggest Carmakers – SPIEGEL ONLINE – International

The diesel scandal is not a failure on the part of individual companies, but rather the result of collusion among German automakers that lasted for years. Audi, BMW, Daimler, Volkswagen and Porsche coordinated their activities in more than a thousand meetings. The exposure of a cartel.


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