Secret German auto subsidies exposed

Ever wondered how the German car industry maintains its technical lead over the rest of the world? Wonder no more.

A German newspaper has uncovered €115 billion ($A172.5b) in federal government assistance to the country’s car industry over the last decade.

Handelsblatt found the German car industry, long suspected of having an overly-cozy relationship with the Merkel-lead government, had vacuumed up and average of €11.5 billion ($A17.2b) a year in assistance, subsidies and just plain handouts since 2007.

In comparison, the Australian government earmarked $2.5 billion in direct assistance to the local auto industry (from which Holden and Toyota will join Ford in departing as a manufacturer by the end of this year) as part of its 10-year Automotive Transformation Scheme, which runs from 2011 to 2020.

The data, dug up by Handelsblatt, was part of a government reply to a Left Party question and showed the car-makers being helped with tax benefits, the disposal of old cars and €1 billion in direct research and development help.

Daimler was the biggest beneficiary of the R&D aid, soaking up €191 million in the last decade, while the Volkswagen Group took €110 million and Daimler’s premium rival, BMW, was given €107 million.

Further down the list was MAN (€16 million), Opel (€14 million), Ford (€13 million) and Audi (€9 million).

The Berlin-based German government has also spent about €800 million on 25,000 vehicles over the past decade, mostly designed and built in Germany.

Volkswagen delivered 15,499 vehicles to the German government, Daimler pumped in 3107, Opel (now under French management) sold 3044, Ford chipped in with 1562 and BMW sold 1226.

One of the Left Party’s law-makers, Herbert Behrens, insisted the funding wasn’t always spent in the right ways and didn’t always have the desired results, blaming it for Dieselgate and for holding back electric cars.

“Billions in tax money have been put in dead-end technological developments which resulted in the emissions scandal,” Behrens said.

“The government is serving the short-term interests of the auto industry,” he said, adding it was “obstructing the changeover” to electric cars.

The Merkel government has set a domestic sales goal of a million electrified (battery electric and plug-in hybrid) cars a year by 2020, which Merkel now admits it won’t reach. Only 80,000 electrified cars were sold in Germany last year.

Instead, Chinese car-makers have taken the lead on sales of electric vehicles, while California’s Tesla has demonstrated a market for the technology at the premium end of the market, albeit at consistent losses.

The German government also has targets to cut emissions by 40 per cent by 2030 and to slash it to zero by 2050.

The car industry directly employs 800,000 people in Germany, many of whom have been hit by the sudden decline in diesel sales in the country, where volumes have fallen 8.1 per cent since the beginning of this year, leading to Bavaria’s governor Horst Seehofer calling for a subsidy on diesel cars to lift sales.

Oddly enough, a diesel subsidy would most benefit BMW, which is based in Bavaria’s capital city, Munich, because it has the highest proportion of diesel sales out of all Europe’s main players, at 71 per cent. The next richest diesel model mix is at Daimler, at 64 per cent.

The flipside to that is a proposal by Stuttgart, the capital of the neighbouring state, to ban diesels from city streets on bad pollution days starting next year. Stuttgart is home to both Daimler and Porsche.