Do German cars have a future?

Until a few years ago, German car manufacturers enjoyed the reputation of being world leaders. But for a few years now, the industry has been struggling with many challenges: Emissions scandal, internet companies developing autonomous cars and new markets developing their own vehicles, such as China and India. Will German cars only be a niche product in the future?

The first step in combating a problem is to recognize it. Unfortunately, I already see a major problem here, as I will explain in a moment using a few examples. But even if the problem is recognized, the framework conditions must allow it to be combated. Unfortunately, I see major problems in both areas.

Is the automotive industry waking up?

About a year ago (2016), I was talking to an engineer (Daimler). We got talking about autonomous driving. When I said that we needed to warm up in this regard, he pointed to the 100 km autonomous drive of a Mercedes-Benz in August 2013. He wasn't aware that Google had already driven half a million kilometers autonomously in August 2012, a year earlier.

I was talking to another engineer (BMW) at a conference this year where I came across the project of Joe Justice who develops, builds and sells roadworthy vehicles on a weekly basis. He was not impressed: instead, he said that it was not difficult to build a roadworthy car. The really difficult part was the equipment, and BMW was the leader in this area.

These are two anecdotes from line employees. But management also has serious problems. The most obvious example is VW: a profitable company with high customer satisfaction is risking everything to... well, why? Either because of a lack of competence (not being able to build standard-compliant vehicles) or greed.

Manufacturers who don't have to deal with scandals don't seem to be in a hurry. At least that was the impression given by Daimler's keynote at last year's ReConf. There, the CIO Siegmar Haasishow slowly and leisurely MBSE should be introduced.

What should happen?

To remain competitive, it is worth examining how the competition works. The most obvious example is Tesla, which already manufactures and sells vehicles. Another inspiration is the aforementioned Joe Justicewho, incidentally, has the German automotive industry queuing up to take part in his training courses on agile hardware development.

Then there are companies like Apple and Google to look at. To be fair, it has to be said that they have not yet brought a finished vehicle onto the market. However, if you consider that Apple has a higher annual turnover than Daimler ($215 vs. €150 billion), or about ten times the value, it is quite conceivable that a smaller manufacturer could be acquired "just like that" in order to pick up the corresponding know-how.

Finally, it is not wrong to look beyond the automotive industry, for example to space travel. I recently published a Article about SpaceXwho, with less than a billion dollars, have managed to carry out 50% of all publicly tendered satellite launches.

I will soon be writing a more detailed article on the subject of "What needs to happen".

Are the framework conditions right?

Even if the car manufacturers decide to tackle the challenges: Does Germany even have the right framework conditions to take the lead again? At syscamp Nord, this topic was discussed in the context of agile hardware development, where everyone quickly agreed that the mindset needs to change.

Unfortunately, politicians are too preoccupied with protectionism, as the VW scandal shows. At the same time, Germany is still not a business-friendly country: industrial promotion is very much focused on structural measures, such as broadband expansion, and not enough on framework conditions that enable innovation. Concrete example: The Geodata service Here has been taken over by Audi, BMW and Daimler, making it an important infrastructure component for autonomous vehicles. This means that the infrastructure exists, but not the innovation. For example, the book "The Alliance: Managing Talent in the Networked Age" innovative approaches that completely turn the traditional relationship between employer and employee on its head. However, such approaches are difficult to imagine with German labor law. What such approaches look like in detail is also material for another article.

Conclusion

I hope I'm wrong, but I fear that we haven't seen the worst yet: The German automotive industry is facing enormous challenges, and the industry doesn't even seem to have recognized this yet. But even if it has, it is doubtful that the problems can be tackled efficiently.

My hope would be that the sluggishness of industry would be compensated for by innovative start-ups. Unfortunately, the framework conditions for such innovations are not very good in Germany.