World Champion Auto Manufacturing Nation

The Opel nail-biter: behind the rescue effort for the distressed automaker there’s another aspect of the crisis – the battle for tomorrow’s market share.

If it were left up to the laws of the free market everything would have been over last Wednesday evening: the German government wouldn’t have announced the continuation of efforts to save automaker Opel (thus keeping the hopes and dreams of their 26,000 employees alive), but rather, the certain demise of General Motors’ tradition-rich German branch.

Global demand for Opel products just isn’t there when there’s already an excess capacity of near 30 percent worldwide. This is regardless of decades of mismanagement by General Motors, also emphasized by the results of the “scrapping premium” offered to potential new car buyers. (Trans. Note: the premium in Germany is described by Wikipedia as follows: “Every owner of a car being older than 9 years was entitled to a scrappage premium of 2,500 euros when buying a new car.”)

The good news was that Opel came off quite well on new car sales with about a 10.4 percent market share; the bad news was that 19.4 percent of the junkers turned in to get the premium bore the Opel insignia. The shrinking market share has meanwhile dwindled even more. When the scrapping premium offer expires, the blush will really be off the rose as sales again fall. Opel will come under even worse pressure from all the 1,000 Euro Tatas and Cherry cars from India and China that will dominate sales. The period of suffering for automakers will only be prolonged by more rescue efforts.

The government action might be defended (and half the cabinet would have to approve) on the basis of one aspect: if one of Germany’s core industries emerged internationally dominant, come hell or high water. Because the great crisis – now metastasizing from the abstraction of economics to the reality of everyday life – is all about the battle for pole position in the race for market share in the third millennium. Who controls the automobile market of the future? Which banks will dominate financial markets? Will hidden leaders remain in control of world markets? Who will control machinery construction, chemical production and all the other global activities?

Germany and Europe could emerge from the crisis in a position to potentially profit from it – theoretically. But the European Union is suffering the growing pains of its eastward expansion and appears to be as divided as it ever has. A common European constitution is as distant as a common economic, social or foreign policy. Italy defends Fiat, France fights for Peugeot and Renault, and England wants London to remain the center of all finance and therefore battles against any European Union plans for control. The European man on the street feels that and knows it as well, which is why they’ll participate only hesitatingly in the European parliamentary elections in June.

Five main teams will be the major players in the economic championship league of tomorrow and beyond: Europe, the USA, China, India and a consortium of countries that control the raw materials. The pennant winner is yet to be determined. It’s by no means certain that “old” Europe, with its cultural, historical and political-economic differences will finish first. The Chinese are well positioned in the race at present with their bids to take over Opel and other German industries battered by the economic crisis. With $2 trillion in reserve currency, enormous anti-crisis potential and continued growth, China is in the best shape to take advantage of any future weaknesses shown by its competitors. And Obama-land is by no means out of it yet, either.

The Americans are still world champions in the one discipline that comes in handiest in a crisis: they excel at reinventing themselves.