Trump wants German carmakers to “become American car companies.” How would that work exactly?
Trump wants German carmakers to “become American car companies.” How would that work exactly?
Earlier this fall, Republican presidential candidate Donald Trump spoke at a rally in Georgia and had a message to workers and foreign automakers: “I want German car companies to become American car companies. I want them to build their plants here.”
That suggests more incentives to German automakers to build their vehicles here, rather than shipping them in from there, or penalties for imports. To discuss from his vantage point in Berlin, Germany, Stephan Richter spoke with “Marketplace Morning Report” host David Brancaccio. Richter is the publisher and editor-in-chief of The Globalist. The following is an edited transcript of their conversation.
David Brancaccio: I mean, right now Germany’s Mercedes puts together some vehicles in Alabama and South Carolina; VW of Germany — Chattanooga, Tennessee; BMW — Greer, South Carolina. But not every German car or SUV is made here. How does the German car industry process something like what the former president said?
Stephan Richter: Well, it’s an attractive offer — especially if you look at the situation in China, where they’ve been totally dependent on high sales, all of these car companies. And they’re losing out badly. Their market shares are declining. The Chinese customers find those cars that the Germans produce no longer up to snuff. And in that Trump audio that you just played, there was lots of hooray, so at least American customers still seem to like German car companies. So that’s a good sign to begin with.
Brancaccio: So that’s interesting. So if someone’s waving an incentive of sorts, some of these German car makers might embrace. I mean, can’t they just sell their vehicles in Europe, a vast market?
Richter: The economy in Europe is very slow. We know that the economy in the United States, for all the political hooplas, will remain relatively strong for the next 20 years, which one cannot assume in Europe. That’s the first thing. The second thing is that productivity in Europe, unlike in the United States, is also very low. VW in Germany has lost about close to 20% of productivity between 2019 and 2022. And that is, to a large part, a function of union rules and of a company being organized mostly for the benefit of making jobs permanent at all times, regardless of what the market does. So that’s not any good way to run a company. And for that reason, it would be quite attractive to shift operations even more into the United States.
Brancaccio: All right, but that’s a big ticket item — either expanding a factory in the United States or building a fresh one. Do you think German car companies be willing to take that kind of plunge, given all the money it would cost?
Richter: You know, yes, it will be difficult. You are absolutely right. On the other hand, they’re getting more and more desperate in their home market. It is a mixed situation. Of course, one can never really rely on Trump if he gets elected, and whether he means it and all of that. But suffice it to say that the situation here in Germany for the car industry is so desperate that I think they’d be willing to grab at any straw, even considering the fact that the U.S. car market can’t exactly be called undersaturated. But you know, despair reigns here, and that’s a big change compared to the last four or five decades when German carmakers ruled the universe.
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