(Bloomberg) -- Germany’s ruling coalition remains divided on how to help stabilize the country’s struggling carmakers ahead of talks Monday with auto executives and labor officials hosted by Economy Minister Robert Habeck.
Finance Minister Christian Lindner signaled he’s unlikely to back a proposal from Chancellor Olaf Scholz’s SPD party to reintroduce a scrappage bonus worth €6,000 ($6,666) for drivers who swap their combustion car for an electric vehicle.
“I don’t want to focus on the proposals of other parties right now,” Lindner, a fiscal hawk who is the chairman of the Free Democrats, said at a news conference in Berlin. It was the latest evidence of discord within the unwieldy governing alliance, which has been squabbling publicly over limited funds in recent months.
“I regret that there is no internal debate about what can now be done to strengthen the framework conditions for the car industry, but that individual proposals are now being made public,” Lindner added.
Europe’s auto industry has been jolted by a drop in demand for EVs after governments including Germany scaled back financial incentives. German manufacturers have also been particularly hard hit by waning demand from China, a key market for Volkswagen AG, Mercedes-Benz AG and BMW AG.
On Friday, Habeck, a member of the Greens who is also the vice chancellor, dangled the prospect of additional support for the industry.
During a visit to a VW facility in northwestern Germany, he told workers that while automakers must take some of the blame for their current woes, he feels “an obligation to do something to get the market going again.”
Stephan Gabriel Haufe, a spokesman for Habeck’s ministry, said at the regular government news conference that Monday’s planned talks, which will take place via video conference, aren’t the right forum for “concrete decisions.”
It’s rather an effort to analyze the situation in the sector and discuss possible solutions, Haufe said, adding that Habeck will make a statement after the discussions at 5:15 p.m. in Berlin.
BMW issued a statement Monday addressing what it called “the demands circulating around today’s autos summit.”
“The German automotive industry does not need short-term, market-distorting flashes in the pan,” the company said by email. “Instead, the focus should be on sustainable framework conditions that make it easier for customers to decide in favor of electric vehicles.”
EV deliveries in Germany — the region’s biggest car market — fell 69% in August, fueling a 36% drop across the region, the European Automobile Manufacturers’ Association said last week.
Germany’s automotive giants have faced a barrage of bad news. Mercedes-Benz last week joined BMW in cutting its full-year outlook, citing weak demand for cars in China.
Chief Executive Officer Ola Källenius pledged he’ll do whatever it takes to bolster returns, which may signal additional efforts to cut costs.
VW, the continent’s biggest automaker, is considering closing factories in Germany for the first time due to lagging demand.
--With assistance from Wilfried Eckl-Dorna and Joshua Gallu.
©2024 Bloomberg L.P.
