It’s War: Rich Against Poor, Germany Against France

The united Europe is more and more turning into a divided Europe, at least when it comes to making cars. On one side are the hugely profitable German carmakers Volkswagen, BMW, Daimler and Porsche. On the other side are its loss-making or barely-profitable rivals including Fiat, Peugeot-Citroen, Renault and GM's Opel. Now, the split drives the two countries apart that started Europe's unification, France and Germany. France's new socialist government wants to punish buyers of bigger cars with huge taxes while lifting the tax burden on smaller cars. The bigger cars are mostly German. Says Reuters: "The French government raised incentives in July for smaller vehicle categories where its Peugeot and Renault champions still cling to market leadership despite double digit sales declines. The so-called "bonus-malus" plan also includes higher taxes on large autos dominated by German premium brands such as BMW and Volkswagen's Audi and Porsche marques. Penalties on new purchases of bigger cars – those with emissions of 181g or more of carbon dioxide per km – will be doubled, meaning that buyers of a BMW X5 SUV would incur a 4,600-euro tax while a Porsche Cayenne SUV would entail the maximum penalty of 7,200 euros. The French cabinet is due to approve the plans on Sept. 24." The German automaker association VDA is up in arms and says the bonus-penalty scheme may violate EU rules by discriminating against premium producers. "From the viewpoint of industrial policy, it's wrong to believe that the domestic (car) industry can be aided by placing a completely exaggerated additional burden on high-end segments," said VDA president Matthias Wissmann. "The financial crisis has driven a wedge between the rich and poor European producers," said Stefan Bratzel, head of the Center of Automotive Management near Cologne, Germany. Europe's troubled carmakers are furious at Volkswagen for ramping up production at a time when they battle with overcapacity. Volkswagen kept some lines running during the summer holiday to catch up with demand, while its poorer relations sent its workers on a very long summer holiday. Holidays being sacred in Europe, the war turns into a holy war. from The Truth About Cars http://www.thetruthaboutcars.com

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