Merkel holds talks with representatives of struggling auto sector

Berlin (dpa) – Chancellor Angela Merkel held discussions with representatives of Germany’s key automotive sector on Tuesday, but there was little hope of a rapid decision on further assistance in the face of the crisis caused by the coronavirus pandemic.

A working group will be set up to look into problems in the sector, a significant part of Germany’s export-oriented economy, according to a document listing the results of the meeting that was obtained by dpa.

Additional aid is being considered, mainly targeted at strengthening the financial position of suppliers, according to the document.

Ahead of the next meeting between the government and industry representatives in November, the group will also look into which aspects of the sector should benefit from a 2-billion-euro aid package that the government signed off on in July.

Merkel has been holding regular talks with carmakers since late 2019 as part of her government’s focus on the development of digital technologies that allow automated and connected driving.

But those political ambitions for sustainable and high-tech car manufacturing have come up against a harsh economic reality for the sector, which was dealt a blow by lockdown measures earlier this year. Demand has also plunged during the pandemic.

Ahead of the meeting, the Christian Social Union (CSU), the CDU’s Bavarian sister party, called for subsidies to boost the purchase of modern cars powered by petrol or diesel as a “bridging technology” to zero-emission vehicles.

Federal Transport Minister Andreas Scheuer, a member of the CSU, warned of looming mass unemployment if the sector was not helped. He was echoed by CSU head Markus Soeder, who said: “I’m really worried about the future of hundreds of thousands of jobs.”

Top German carmakers Volkswagen and Daimler suffered severe losses in the second quarter, when the brunt of the restrictions hit the German economy, while smaller parts suppliers have been left fighting for survival.

Prior to Merkel’s meeting with industry representatives, there were calls for greater government support for the auto sector, a key driver in Europe’s largest economy.

Trade union giant IG Metall joined forces with the Greens and the Social Democrats (SPD) to call for a state investment fund to keep small- and medium-sized companies in the industry afloat.

In June, carmakers failed to persuade the government to include state-funded subsidies for the purchase of new vehicles in a coronavirus aid package, following pushback from the SPD and outcry from environmentalists.

Greenpeace activists assembled in front of Merkel’s chancellery on Tuesday to protest air pollution and call for a more climate-friendly approach to travel.

They used chalk to draw on the ground a 50-square-metre picture of a burning planet Earth being run over by an SUV, a spokesman said.

“If the combustion engine is not phased out, traffic will remain at the bottom of the league in terms of CO2 savings,” said Benjamin Stephan, an expert in transport policy with Greenpeace.

He was sceptical as to whether state aid was necessary for the auto branch, noting that the latest car registration data had returned to levels seen last year.

“The industry doesn’t have a sales problem, it has an innovation problem,” Stephan said.

On Tuesday, the European Environment Agency (EEA) released a report blaming air pollution for over 400,000 premature deaths each year in the European Union.