Automotive industry in Germany

Volkswagen assembly line as of 1973

The automotive industry in Germany is one of the largest employers in the country, with a labour force of over 747,000 (2009) working in the industry.

Being home to the modern car, the German automobile industry is regarded as the most competitive and innovative in the world,^[1] and has the third highest automobile production in the world,^[2] and fourth highest total motor vehicle production. With an annual output close to six million and a 35.6% share of the European Union (2008), Germany is the absolute leader of auto production in Europe since the 1960s.

German-designed cars won in the European Car of the Year, the International Car of the Year, the World Car of the Year annual awards the most times among all countries. The Volkswagen Beetle and Porsche 911 took 4th and 5th places in the Car of the Century award.

History

Replica of the Benz Patent Motorwagen built in 1885

Opel Olympia (1935–1937)

The jeweled one-millionth Type 1

A Trabant 601 De Luxe Limousine

Audi 100 Coupe S (C1)

Ford Taunus TC3 (1979–1982 )

Volkswagen Golf manufactured in Wolfsburg and Zwickau

Germany is considered to be the birthplace of the automobile, as motor-car pioneers Karl Benz and Nikolaus Otto independently developed four-stroke internal combustion engines in the late 1870s, with Benz fitting his design to a coach in 1887, which led to the modern day motor car. By 1901, Germany was producing about 900 cars a year.^[3] In 1926, Daimler-Benz was formed from the predecessor companies of Karl Benz and Gottlieb Daimler and produced cars under the marque of Mercedes-Benz. In 1916 BMW was founded, but didn't start auto production until 1928.

American economist Robert A. Brady extensively documented the rationalization movement that shaped German industry in the 1920s, and although his general model of the movement applied to the automotive industry, the sector was in poor health in the later years of the Weimar Republic. Germany's slow development of the industry left the market open for major American auto manufacturers such as General Motors who took over German company Opel in 1929, and the Ford Motor Company which maintained the successful German subsidiary Ford-Werke, beginning in 1925.^[4]

The collapse of the global economy during the Great Depression in the early 1930s plunged Germany's auto industry into a severe crisis. While eighty-six auto companies had existed in Germany during the 1920s, barely twelve survived the depression, including Daimler-Benz, Opel and Ford's factory in Cologne. In addition, four of the country's major car manufacturers — Horch, Dampf Kraft Wagen (DKW), Wanderer and Audi — formed a joint venture known as the Auto Union in 1932, which was to play a leading role in Germany's comeback from the depression.^[5]

The turnabout for the German motor industry came about in the mid 1930s following the election of the Nazi Party to power. The Nazis instituted a policy known as Motorisierung ("motorization"), a transport policy which Adolf Hitler himself considered a key element of attempts to legitimise the Nazi government by raising the people's standard of living. In addition to development and extensions of major highway schemes (which saw the completion of the first Autobahn in 1935), the Volkswagen project was also conceived to design and construct a robust but inexpensive "people's car", the product of which was the Volkswagen Beetle, launched in 1937. A new city (known as Wolfsburg from 1945) was developed around the factory to house its huge workforce.^[4]

By the end of World War II, most of the auto factories had been destroyed or badly damaged.Germany needed debt relief. The London Agreement on German External Debts of 1953 provided that repayments were only due while West Germany ran a trade surplus, and that repayments were limited to 3% of export earnings. This gave Germany’s creditors a powerful incentive to import German goods, assisting reconstruction of the Car Industry.^[6] In addition, the eastern part of Germany was under control of the Soviet Union, which dismantled much of the machinery that was left and sent it back to the Soviet Union as war reparations. Some manufacturers, such as Maybach and Adler (automobile), started up again, but did not continue making passenger cars. The Volkswagen production facility in Wolfsburg continued making the Volkswagen Beetle (Type 1) in 1945, a car which it had intended to make prior to the war (under the name of KdF-Wagen), except that the factory was converted to military truck production during the war. By 1955 VW had made one million Volkswagen Beetles, and by 1965 had built 10 million, as it gained popularity on export markets as well as on the home market. Other auto manufacturers rebuilt their plants and slowly resumed production, with initial models mostly based on pre-war designs. Mercedes-Benz resumed production in 1946 with the pre-war–designed 170 series. In 1951 they introduced the 220 series, which came with a more modern engine, and the 300 series. Opel revived the pre-war cars Opel Olympia in 1947 and the Opel Kapitän in 1948. (Toolings for the Opel Kadett were taken by the Soviets and used to make the Moskvitch 400-420., which had resumed production of trucks in 1945, began building the pre-war Ford Taunus in 1948. Porsche began production of their Porsche 356 sports car in 1948, and replaced it with their long-lived Porsche 911 in 1964 (which remains in production more than 50 years and several incarnations later).

Borgward began production in 1949, and Goliath, Lloyd, Gutbrod, and Auto Union (DKW) began in 1950. BMW's first cars after the war were the luxurious BMW 501 and BMW 502 in 1952. In 1957 NSU Motorenwerke re-entered the car market.^[7][8]

Automobile manufacturers in East Germany after the war included Eisenacher Motorenwerk (EMW), which also made the Wartburg (car), and VEB Sachsenring Automobilwerke Zwickau, which made the IFA F8 (derived from the DKW F8) and the Trabant. East Germany's status as a communist country was reflecting in the relatively primitive design and refinement of these cars, although they both continued in production until the early 1990s, shortly after the fall of the communist rule and the German reunification.

Initial production by EMW after the war were models that were essentially pre-war BMW 326 and BMW 327 models, as the plant in Eisenach was formerly owned by BMW.

During the mid-to-late 1950s the Bubble car became popular. BMW was the largest maker, with the BMW Isetta and BMW 600. Other makes included the Messerschmitt KR175 and KR200, the Heinkel Kabine, and the Zündapp Janus. Microcars such as the Glas Goggomobile, BMW 700, and Lloyd 600 also were popular. However, the "Bubble car" concept had been abandoned by 1970.

In the late-1950s, BMW developed financial difficulties and control of the company was acquired by the Quandt family. BMW acquired Glas in 1966. In 1961, the Borgward auto group, including Goliath and Lloyd went out of business. In 1958 Auto Union was acquired by Daimler AG, but then in turn it was sold in stages from 1964 to 1966 to Volkswagen AG (at which time the DKW marque was ended and the Audi name was resurrected). In 1969, Volkswagen AG acquired NSU Motorenwerke (developer of the Wankel engine) and merged it with Auto Union, but the NSU nameplate disappeared by 1977 when production of the Ro80 rotary-engine saloon (European Car of the Year on its launch 10 years earlier) was stopped largely due to disappointing sales and a poor reputation for reliability.

Volkswagen was faced by major financial difficulties in the early 1970s; with its ageing Beetle still selling strongly all over the world but its newer models had been less successful. However, the company then enjoyed a revival with the arrival of the popular Passat in 1973, Golf in 1974 and Polo in 1975 - all of these cars featured the new front-wheel drive hatchback layout which was enjoying a rise in popularity across Europe after first being patented by Renault of France with the R16 in 1965. The Polo was Volkswagen's new entry-level model, and was aimed directly at modern small hatchbacks like the Fiat 127 and Renault 5. The mid-range Golf was seen as the car to eventually replace the Beetle, and was easily the first popular hatchback of this size in Europe, leading to most leading carmakers having a similar-sized hatchback by the early 1980s. Production of the Beetle finished in Germany in 1978, although it continued to be produced in Mexico and Brazil until 2003, with a small number of models being imported to Germany and the rest of Europe during its final 25 years. The Passat was marketed as a more advanced alternative to traditional larger saloon cars like the Ford Taunus/Cortina, Opel Ascona (sold in Britain from 1975 as the Vauxhall Cavalier) and the Renault 12.

The Scirocco coupe of 1974 was also a success in the smaller sports car market, competing against the likes of the Ford Capri and Opel Manta. Its partner company Audi also enjoyed an upturn thanks to the success of its 100 range (launched in 1968) and the smaller 80 (launched in 1972 and voted European Car of the Year). Both of the new Audi models featured front-wheel drive. The Volkswagen Polo was in fact a rebadged version of the Audi 50, but the Audi original was a slower seller than the Volkswagen that it spawned and was only available in certain markets.

Volkswagen and Audi both enjoyed a growing rise in popularity in overseas markets during the 1970s and this continued throughout the 1980s. Audi launched a well-received large saloon model, the Audi 100, in 1968, and followed this four years later with the smaller Audi 80, winner of the European Car of the Year award for 1973. In 1980, Audi moved into the sports car market with its front-wheel drive Coupe and the four-wheel drive, high-performance version, the Quattro. The Quattro four-wheel drive system was later adopted on Audi's saloon models.

During the 1970s and early 1980s, General Motors integrated Opel with the British Vauxhall brand so that designs were shared with the only difference being the names. Faced with fierce competition from up-to-date designs from Volkswagen, General Motors moved to a front-wheel drive hatchback in 1979 with the latest version of the Opel Kadett, followed in 1981 by new Ascona (which retained the Vauxhall Cavalier name for the British market). Ford, which had operations in Britain, Spain and Belgium as well as its Cologne plant in West Germany, also entered the hatchback market with the Fiesta (1976), Escort (1980), Sierra (1982) and even the luxury Scorpio (1985), although the Sierra and Scorpio were eventually available with a saloon bodystyle, and Ford introduced the Escort-based Orion saloon in 1983.

BMW and Mercedes-Benz remained committed to rear-wheel drive on its saloons and booted coupes during these years. BMW, however, developed its model ranges more comprehensively in the 1980s and early 1990s. The original BMW 3 Series, launched in 1975, was sold as a two-door saloon or cabriolet. The second generation model launched in 1982, however, was eventually available also as a four-door saloon and five-door estate, and during the 1990s the third generation model range eventually included a three-door hatchback as well. The BMW 5 Series, the mid-range model launched in 1972, was only sold as a four-door saloon for its first two generations, but a third generation model was available as an estate from 1991.

The West of Germany was far more technically advanced in comparison with the East (more than 4.5 millions against 200 thousands annual production of auto vehicles in the 1980s), with the divide ending with German reunification in 1990.

During the 1980s and 1990s, the German auto industry engaged in major acquisitions and international expansion all over the World. Besides of direct export, German manufacturers found or bought plants in European, Asian, Latin American countries and in the United States even. Auto industry of Mexico, Brazil, China, Turkey, some post-socialist East European countries gained by German investments in a significant share.

Volkswagen set up a joint venture with Shanghai Automotive Industry Corporation in 1984 (named Shanghai Volkswagen Automotive), and in 1990 established FAW-Volkswagen to produce VWs and Audis in China. VW also acquired SEAT of Spain in 1986 and Škoda of Czechoslovakia in 1991, improving the model ranges of these manufacturers and helping increase their market share significantly across Europe. Volkswagen had even shifted Polo production to a SEAT factory in Spain after its acquisition of SEAT, and the 1993 SEAT Ibiza formed the basis for the following year's new Polo.

VW also made use of its components across the different marques; for instance, by the year 2000, the floorpan of the Volkswagen Golf for instance had spawned the Audi A3, Audi TT, SEAT Toledo, Seat Leon, Skoda Octavia and Volkswagen Bora.

In 1998 VW moved into the luxury and supercar end of the market and acquired Bentley of Britain and the Bugatti and Lamborghini marques from Italy.

BMW acquired the British Rover Group in 1994, but large losses led to its sale in 2000. However, BMW retained the Mini (marque) name for a line of new cars, all built in Britain from 2001. During the 1990s, BMW opened a production facility for SUVs in Spartanburg County, South Carolina. BMW also acquired the Rolls-Royce Motor Cars name, effective as of 2003, and in the same year established a joint venture in China named BMW Brilliance. Daimler-Benz entered into what was initially called a "merger of equals" with Chrysler Corporation in 1998. However, cultural differences and operating losses led to its dissolution in 2007, although Daimler-Benz kept Chrysler's Chinese joint venture, renamed Beijing Benz. The company also launched the Smart (automobile) in 1998 and relaunched the Maybach brand in 2002. In addition, during the 1990s they opened a production facility for SUVs in Tuscaloosa County, Alabama.^[9][10][11]

On 5 July 2012, Volkswagen AG announced a deal with Porsche resulting in VW's full ownership of Porsche on 1 August 2012. The deal was classified as a restructuring rather than a takeover due to the transfer of a single share as part of the deal. Volkswagen AG paid Porsche shareholders $5.61 billion for the remaining 50.1% it did not own.^[12][13]

Present day

Currently, five German companies and seven marques dominate the automotive industry in the country: Volkswagen AG (and subsidiaries Audi and Porsche), BMW AG, Daimler AG, Adam Opel AG and Ford-Werke GmbH. Nearly six million vehicles are produced in Germany each year, and approximately 5.5 million are produced overseas by German brands.^[14] Alongside the United States, China and Japan, Germany is one of the top 4 automobile manufacturers in the world. The Volkswagen Group is one of the three biggest automotive companies of the world (along with Toyota and General Motors).

The Chevrolet Volt and its GM Voltec powertrain Technology were invented and developed first and foremost by the former German Opel engineer Frank Weber and—still today—some of the most important parts of the development of GM's electric vehicles is done in Germany.^[15]

Manufacturers

References

1. Germany – The World’s Automotive Hub of Innovation, Germany Trade & Invest, Ernst & Young European Automotive Survey 2013, retrieved 25 April 2015
2. Total Cars Produced In The World (accessed February 16, 2014). Data source is from Organisation Internationale des Constructeurs d'Automobiles ("OICA"); production statistics; 2012 statistics, oica.net (accessed February 16, 2014).
3. The German Car Industry, German Steps – Cultural Notes (BBC).
4. Reich, Simon (1990). "Volkswagen and the State". The Fruits of Fascism: Postwar Prosperity in Historical Perspective. New York: Cornell University. p. 25. ISBN 0-8014-9729-9.
5. Abelshauser, Werner (2005). The Dynamics of German Industry: Germany's Path Toward the New Economy and the American Challenge. Germany: Berghahn Books. ISBN 1-84545-072-8.
6. Heather Stewart (18 January 2015). "A new idea steals across Europe - should Greece's debt be forgiven?". The Observer. Retrieved 25 January 2015.
7. Norbye, Jan P. (1987). The Complete History of the German Car. Portland House. ISBN 9780517641804.
8. Eckermann, Erik (2001). World History of the Automobile. Society of Automotive Engineers. ISBN 9780768008005.
9. "History of Volkswagen Aktiengesellschaft". fundinguniverse.com. Retrieved 15 February 2015.
10. "History of Bayerische Motoren Werke AG". fundinguniverse.com. Retrieved 15 February 2015.
11. "History of DaimlerChrysler AG". fundinguniverse.com. Retrieved 15 February 2015.
12. "Volkswagen finally, really, taking over Porsche". Autoblog.com.
13. "Volkswagen Group Volkswagen and Porsche finalize creation of Integrated Automotive Group" (Press release). Volkswagen Group. Retrieved 15 February 2015.
14. Facts about Germany. "Car-making: The strongest sector". Archived from the original on 27 March 2010. Retrieved 15 February 2015.
15. "Electrifying Prospects". Deutschland online. 2008-06-18. Retrieved 2010-04-13.