The Car Industry before and After the Coronavirus Crisis: Forget Solutions of the Past, It’s Time to Set a New Course.

I. How to achieve a good life for all

The coronavirus crisis has brought harsh restrictions to our daily lives, such as school and business closures, reduced working hours, shortfalls in sales and loss of income, and will soon result in insolvencies and large-scale unemployment. For many, this pandemic is an existential threat, causing suffering or even death. Nowhere is this more apparent than in countries with poorly functioning healthcare systems, not least due to the severe impacts caused by the recent years of austerity.

However, we are also witnessing other phenomena in this time of crisis. Production is being scaled down to only socially essential functions, and people are starting to see that care work and infrastructure services are the sectors of our society that are key. When it comes to public debt, leaders are activating emergency powers to free up hundreds of billions of euros, thus unmasking the illusion that austerity is an economic necessity. It can now be seen for what it is: a political imperative used in the interest of the ruling classes. It has also been made easier to access partial unemployment support and Hartz IV (Germany’s basic unemployment benefit), while car factories and parts suppliers have paused production or started making face masks and medical devices – converting operations to serve a social and ecological purpose suddenly seems conceivable and feasible. 

For many, everyday lives now run at a slower pace. The technician in the car factory starts her working day at 7 a.m. and is relieved by a colleague at 1 p.m. to ensure hours are staggered in the workshop: a full-time job reduced to a six-hour day with no loss of pay. Fewer cars on the roads allow more space for cycling lanes and pedestrianised areas to be expanded. The reduction in traffic is also improving the atmosphere of cities and towns, as well as opening people’s eyes to the sacrifices and impositions of the life they had previously accepted as normal, i.e. urban areas orientated towards cars. As an article in the Berliner Zeitung (9/10 April 2020, p. 1) put it, the coronavirus crisis "offers a glimpse of what the future of urban transport could look like. Traffic noise, exhaust fumes and accident numbers have dropped, while the quality of life has improved. The visible changes in cities such as Berlin can be seen as an advert for a more people-friendly approach to mobility."

This is what a good life might look like – if wealth is shared around, if we stop producing for profit and instead permanently shift production to focus on what is meaningful and necessary for both our society and our environment. Advertising, the manufacturing of arms, gigantic cruise ships and millions of cars, as well as the considerable costs of constructing new motorways, could become a thing of the past. The privileged would be less so, life for everyone would improve, and the economy would work for the people, not the other way around.

This crisis has taught us that all this is possible. It is now a matter of taking steps to make sure that society learns from these experiences so that we don’t immediately fall back into the socially and environmentally devastating way of life that existed before – not least to prevent possibly even larger upheavals caused by the impending climate crisis.

II. The spoilsports

The resistance to such a transition is already significant. And it will only grow the more widespread the possibility of another approach to social (re)production becomes. The car industry’s owners and top managers, together with the associations of the automotive sector, have already made an appeal to the European Commission and the German government, calling for the deregulation of safety, labour, climate and environmental protection measures once the pandemic is over to compensate for ‘losses’ in production and revenue. But if car makers are requesting state aid, this should only be granted on the condition that social and environmental criteria are met and this aid can be directly converted into shares. This would be the first step towards nationalisation of these corporations: taxpayer money is only offered in exchange for a holding and a right to a say in the company. 

A nationalisation process of this kind is not least imperative because the crisis impacting the automotive industry is of their own making and was apparent long before the coronavirus hit, as became clear at the umpteenth car summit held in Germany’s Federal Chancellery (Kanzleramt) on 15 January this year. Even then, an agreement was made to facilitate the reduction of working hours. In a position paper on the meeting, the German Association of the Automotive Industry (VDA), the Federation of German Employers’ Associations (Gesamtmetall) and trade union IG Metall stated that it was of the utmost public interest that German industry remain competitive into the future. VDA board member Dr Stefan Wolf said, "If state funding is made available, we’ll succeed in bringing about structural change." His suggested figure? Up to 20 billion euros.

As a matter of fact, sales in all of the major markets have already been in decline since 2017. This is due to a lack of (effective) demand and the German industry’s extremely high dependency on exports. In 2018 Germany’s car manufacturing dropped by almost 10% from 5.6 to 5.1 million; the following year saw another decrease of 8% from 5.1 to 4.7 million vehicles. This means that the cumulative decline in 2018/2019 was already more significant than in 1993 and 2009, the last two times the industry was hit by crisis. The switch to electric cars is not a solution to the social and environmental issues we face: purchase figures for these vehicles are nowhere near planned volumes as the high retail price remains a deterrent for customers.

With additional coronavirus-linked production downtimes combining with an accelerated recession also caused by the virus, it now looks likely that this year sales will collapse. It is an unprecedented crisis for an automotive and parts industry orientated towards constant growth. While large-scale manufacturers such as VW, Daimler and BMW, Bosch, ZF and Conti should manage to make it through the crisis without having to face any existential challenges thanks to reserves that run into the billions, parts industries both big and small will face ruin and tens of thousands of jobs will vanish. First to go will be the contractors. What we are witnessing is the disruptive shrinking of the car industry.

Now shoddy proposals are being put forward, such as suspending VAT (or even creating a ‘negative value added tax’), awarding premiums for car purchases, implementing car-scrapping incentives as well as countless other benefits. In addition, there is talk of deregulating the Working Time Act and lifting legal restrictions for car manufacturers and users. Dr Stefan Wolf from the VDA argues that "[i]t won’t work without government incentives – including for combustion vehicles. We need a stimulus package so that people will return to car dealerships and buy cars." He goes on to say: "I fully back climate protection measures. The question you have to ask is what our top priority is. In my view, top of the list is getting our economy up and running again. That’s what sustains us all. And only once companies are generating income are they able to develop and produce products to help combat climate change."

The car manufacturers want to return to business as usual and, what’s more, receive large amounts of funding from national and supranational institutions. And the current coronavirus crisis appears to be playing right into their hands. Unlike buses or trains, travelling by car allows people to keep their distance from others; occupants do not have to tolerate being in close proximity to strangers. Automobility allows travel at a distance from, as well as in competition with, others. From the very start, this form of mobility corresponded to the principles of competition and the maximisation of the individual benefit which are inscribed in the existing capitalist society. This enabled automobility to become the dominant form of transport and car manufacturing grew into a key sector of the capitalist economy. When social distancing must be practised in times of a pandemic, this could once again be a boon to the industry, with the car gaining in popularity as a form of transport that lowers the risk of infection.

Such a development would, however, be disastrous. Firstly, there are clear indications that air pollution is linked to the penetration of the coronavirus deep into a person’s lungs (e.g. through fine particulate matter, which is largely emitted by private motor vehicle transport) where it can trigger serious and sometimes fatal reactions. Secondly, it is widely acknowledged that car traffic is a major contributor to global warming, the negative consequences of which are far greater for mankind and the environment than the current coronavirus pandemic. Thirdly, there is no consideration of the fact that extensive protective measures (disinfection, social distancing) are essentially possible on public transport.

If car travel is allowed to dominate and if, as the car lobby is currently demanding, the industry is even given a boost by government, the result would be a huge increase in competition on our roads and, where production is concerned, over markets and market shares. It would also mean more intense predatory exploitation of raw materials and mineral resources as well as the further pollution of our environment, which poses a threat to the very existence of many, particularly those in the countries of the Global South where these resources are located. The companies want to use this crisis to deregulate occupational health and safety, road safety, as well as climate and environmental protection. These solutions of the past will not help us to overcome this crisis but will instead lead us towards the next, even more devastating catastrophe.

III. Actions now required

Whether the car industry will succeed in their ploy depends on whether we fall back into our old pre-coronavirus ways of living or instead focus and insist on change. It is high time that we consign the political-industrial automotive complex to the past. But in order to do that, we will need initiatives and alliances that completely redefine the meaning of social security and a good life.

We therefore propose taking action to plan, and collectively pursue, the following measures and projects:

1. Vehicle tax reform: a bonus for small cars, supplementary premiums for vehicles with over 120 PS, over 2,000 cc, (an) exponentially increasing (luxury tax) for larger, faster, heavier cars.
2. A toll for vehicles with a total weight of over 2.5 tons.
3. The cancellation of all tax benefits for motorised private transport and subsidies for the car industry; replace company cars with tickets for local transport.
4. Speed limits 30/90/110 km/h – to ease the pressure on the environment and reduce the number of serious accidents: in 2019 alone road traffic accidents caused over 380,000 casualties and more than 3,000 fatalities.
5. Expansion of pedestrianised areas and cycling lanes.
6. Expansion of public transport – creating car-free zones in city centres, reviving lively areas and towns/cities by offering good shopping options that are accessible on foot (Compact Cities).
7. Reduction in working hours – universally applied short full-time employment consisting of, on average, 30 working hours spread over a four-day week.
8. Equal pay for equal work/general applicability of collective agreements.
9. Adopt a principle of phasing out the construction of roads – free up funds for local public transport.
10. No public funds for charging infrastructure.
11. Growth of regional economic activity – local-for-local.
12. Setting up of transparent regional transformation councils consisting of regional policymakers and representatives from industry, trade unions, and environmental and transport organisations.
13. Nationalisation of large automotive and parts industries in Germany in line with Articles 14 and 15 of the Basic Law for the Federal Republic of Germany with the aim of developing public-sector companies providing mobility as a public service in urban centres and rural regions. 

Freedom and limitless adventure: the car industry’s decades-old promises and slick marketing imagery have, for the majority, turned into the opposite. A socio-ecological transformation of our society, a restructuring of the car industry, a real shift in mobility towards good, affordable transport links via bus and train, potentially also optimised through algorithms, would not put a single job at risk. On the contrary, this type of transformation would create many new employment opportunities, lead to a higher quality of life in urban areas, to more leisure time and a good life for all. But it is also a prerequisite to safeguard the very fabric of life for humankind on Planet Earth. We know the money is there. We still have a chance. Let’s not waste it.

Signatories

Dr André Baier (‘Blue Engineering’ academia reform project, TU Berlin), Anastasia Blinzow (Rosa-Luxemburg-Stiftung), Dr Mario Candeias (Rosa-Luxemburg-Stiftung), Timo Daum (guest researcher taking part in the Research Group Digital Mobility at the Berlin Social Science Center), Prof Ulrich Duchrow (University of Heidelberg), Ulrike Eifler (Rosa-Luxemburg-Stiftung), Bettina Ellermann (IG Metall representative and works council member), Andreas Fuhs (advisor to the Left Party, Berlin), Dr Tobias Haas (FU Berlin), Thomas Händel (former MEP, Rosa-Luxemburg-Stiftung), Dr Alfred Hartung (chemical scientist, former IGM representative at VW in Wolfsburg), Joachim Heier (Attac), Matthias Jochheim (IPPNW), Lars Hirsekorn (IG Metall representative), Bernhard Knierim (author, research consultant), Dr Heike Knops (theologist and philosopher, Evangelical Church in the Rhineland), Stephan Krull (Rosa-Luxemburg-Stiftung, former member of the works council at VW Wolfsburg), Klaus-Dieter Lambert, Sabine Leidig (Member of the German Parliament, The Left Party), Karl-Heinz Ludewig (research consultant), Klaus Mertens (research consultant), Volker Röske (Attac), Wolfgang Schaumberg (former member of the works council at Opel Bochum), Margareta Steinrücke (sociologist, Attac AG ArbeitFairTeilen), Dr Thomas Sablowski (Rosa-Luxemburg-Stiftung), Heike Sudmann (representative of the Hamburg City Parliament, The Left Party), Dr Winfried Wolf (author), Carl Waßmuth (consultant engineer, Gemeingut in Bürgerhand), Prof Markus Wissen (Berlin School of Economics and Law, Berlin), Fanny Zeise (Rosa-Luxemburg-Stiftung).

Attac ‘einfach.umsteigen’ campaign group