October 02, 2018
Whatever it takes - diesel version
The German diesel story has a certain tragedy-to-farce quality as the government is now pursuing a whatever-it-takes strategy to keep diesels on the roads and in the cities. As FAZ reports, the government managed to get the car industry to offer vouchers of up to €10,000 for car owners to exchange their old diesel cars for new ones. This came after the government dropped plans to force the industry to upgrade older cars free of charge.
The premiums would be concentrated on regions subject to diesel bans. The idea is to get most cars exchanged so that the cities could lift the ban altogether. The government wants to avoid at all costs any discrimination that would identify some cars as not compliant.
Is this going to work? We agree with the view expressed in the FT by Corlos Ghosn, who is in charge of the alliance between Renault, Nissan and Mitsubishi. He said customers don’t care about what engine they have. They make their calculations based on cost. And the problem with diesel is the resale value. He concludes that diesel is over because policymakers have condemned it.
We think the German compromise will smooth some of the frictions, but this comes as a cost to the German car industry. It is already behind in the development of new technologies, and its resources are now being strained further by a large number of legal proceedings.