Angela Merkel, the current Chancellor of Germany, officially started her re-election campaign by taking direct aim at the German automotive industry. Merkel called for German automakers to regain their innovative edge, restore the people’s trust, and create more jobs. Industry executives might want to take her seriously as Merkel is already leading in the polls by as much as 50% over her nearest rivals. It looks like she is a shoe-in to stay in power.
Merkel knows just how important the auto industry is to Germany. Motor vehicles are the country’s number one export and account for up to 800,000 jobs. The Chancellor noted that the trust Germany’s automotive titans once had with consumers around the world has been eroded and is in need of repair after diesel emissions cheating led to massive recalls and ongoing criminal and civil investigations. Without consumer trust and confidence, the industry could falter, and the economy could suffer as a result.
Merkel’s tenure as chancellor is now in its 12th year and, while she weathered the global recession and spearheaded an economic turnaround like a boss, the reality is that the increase in underemployment in low-paying and temporary jobs has led to growing discontentment. Even in Germany, a wide majority feel like they have been left behind in the current economic climate that’s dominated by globalization and a widening gap between rich and poor has. Merkel was criticized for going soft on automakers at the recent emergency ‘Diesel Summit’ in Berlin and ignoring popular concern over air quality. Now, she’s switching tactics as she makes her case for re-election.
Merkel is betting that by pushing the auto industry to invest in new technologies and getting ahead of the curve on electric cars, she can convince the public that automakers deserve a second chance and create a wave of new jobs. She’s willing to assist the auto sector with lucrative tax cuts worth about $18 billion and public spending on electric infrastructure. If, as many predict, Merkel’s does go on to capture another term in power, the German auto industry will have a stern taskmaster pushing them back to a dominant global position—whether they like it or not.