By on February 25, 2010

In its fight against American CAFE rules, Porsche is ratcheting up the decibels. For background on Porsche’s beef, see here, and here. For a possible way out, see here.

Unconvinced by electrification plans, Porsche’s new boss Michael Macht publicly joined the fray. He doesn’t mince words. “What’s happening here borders on a trade war,” said Macht yesterday evening, while Das Autohaus took notes. “We’ll keep at it. The German auto industry will not give up territory over there unnecessarily.”  Financial Times cited Macht as saying that “the Americans are spoiling for a fight.”

If it should come to a blood-letting, the Germans won’t trot to the slaughterhouse as cheerfully as their Japanese colleagues. GM is running around in Europe with its begging bowl. Watch how the needy ward of the American government is being treated in Germany.

As far as Porsche is concerned, the USA is still their largest market, but sales were down 40 percent last year. China is (after Germany) their third largest market and is growing rapidly. For Porsche’s new parent VW, the situation is even more pronounced. In a trade war, they could retreat from the U.S.A. and would barely notice it. Except in their books: VW is losing money stateside. The battlefield of the auto business is Asia.

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37 Comments on “Porsche CEO: “What’s Happening Here Borders On A Trade War”...”


  • avatar
    bmoredlj

    “If the average fuel economy of a manufacturer’s annual fleet of car and/or truck production falls below the defined standard, the manufacturer must pay a penalty, currently $5.50 USD per 0.1 mpg under the standard, multiplied by the manufacturer’s total production for the U.S. domestic market.”

    Either pay the fine, build more efficient vehicles to raise your CAFE, or leave. This new reg doesn’t target any particular automaker nor any specific nation. Though Mr. Macht’s words are puzzling, as the Germans have historically not done particularly well in fights with the US.

    • 0 avatar
      johnthacker

      “Either pay the fine, build more efficient vehicles to raise your CAFE, or leave. This new reg doesn’t target any particular automaker nor any specific nation.”

      And grandfather clauses and literacy tests didn’t target any particular race.

      It’s stupid to say that a company that just produces sports cars is banned, but if that company merged with another it would be okay to still produce and sell the same number of cars. It’s also dumb to have a literal grandfather clause that uses 2009 as the start date. What a way to shut out small companies and new companies. But CAFE is ridiculous. If you want to tax emissions or gas consumption or do something else sensible, fine. But regulating on the basis of the corporate-wide fleet makeup is silly.

  • avatar
    BDB

    Car manufacturers will adjust after some protesting. Remember back in the ’70s when they swore unleaded gas would ruin the car industry?

  • avatar
    Da Coyote

    Let’s see…Porsche, or the Obamaloon administration…Porch, or the Obamaloon administration.

    Hmmmm, Germany, do you have an appropriate cell within which to incarcerate our White House idiots?

    We’ll pay the transportation.

  • avatar
    L'avventura

    The Obama administration’s protectionism is well displayed either directly (Mexican truck-NAFTA, Chinese tires, automotive bailouts, KORUS FTA) and maybe even insidiously (perhaps this Porsche-VW incident, Toyota recall handling, and even a potential EPA rating of 230mpg for the Volt could be viewed as this as well).

    However, a dramatic increase in American protectionism was expected by most of the world with the change in administration. To a certain extent its an inevitability with a government close to unions. Mexico truck incident was at the behest of the Teamsters, and the KORUS blockage right now is due to the UAW. At the same time, countries such as Korea also have union pressure for their brand of protectionism (as discussed at this site). Sarkozy has been accused of this with the handling of Renault.

    Now the real question is ‘what are you going to do about it?” Europe, Asia, and the rest of the world?

    Its a slippery slope. Accusations and even the mere appearance of protectionism can be very dangerous. The real danger is that the rest of the world becomes equally protectionist and hostile in retaliation. This of course benefits nobody.

    • 0 avatar
      BDB

      Obama is less of a protectionist than Ronald freaking Reagan (remember the car import quotas? Harley Davidson)? Even Bush put tariffs on Japanese steel. Somehow, the world economy didn’t collapse either time.

      Both our parties have been so timid on trade for the last 20 years that even mild moves seem radical now.

    • 0 avatar
      L'avventura

      America’s geopolitical standing has changed since the Regen era, and we’ve moved from a world where the US was the sole pillar of global market consumption to a world where developing nations like China is set to become the primary driver of the global economy.

      The dynamics certainly have changed. Even the Bush-era steel tariffs in 2002-2003 was made in an entirely different world then it is today.

      Hitherto, protectionism against America carried less weight because of one-sided trade imbalances, America and its consumers was the most important market to the developed world. Now, its changed, the development and ascendancy of countries like China, Brazil, India means that protectionist retaliation can be devastating to America. Its happening already, Japan’s biggest export market is no longer the US, its China. The economical and political relationships is inevitable. A pro-China government is starting to arise in Japan today.

      Let’s put it this way, the CIA’s National Intelligence Council put out a report that the geopolitical landscape will be completely different by 2020 with developing nations like China in the lead. The DOE predicts that China’s GDP will be $7.1 trillion in 2020.

      http://www.grist.org/article/2010-01-05-the-world-in-2020-china-the-u.s.-the-global-south-and-the-planet/
      http://www.dni.gov/nic/NIC_2025_project.html

      Global acts of protectionism, such as the recent Chinese Boeing sanctions, are costly to the US economy (especially in the zero-sum commercial aviation industry), and these economic factors will continue to change over the next decade. A trade war is in no one’s best interest.

    • 0 avatar
      BDB

      The fact we have such a big trade deficit with China is an argument for more protectionist measures, not less.

      Smoot-Hawley was so horrible and a bad move because in the ’30s the US had a trade surplus with the world. If you have a trade surplus you should want free trade policies, but if you’re running a big trade deficit (like we were in the ’80s, and ’90s, ’00s, and today) protectionism can be beneficial. Ex. Reagan’s quotas led to the Japanese and Germans building assembly plants in the United States.

      Where’s China’s economy without exports to the United States?

      Yeah, that’s what I thought. The US can survive their slap on the wrists to Boeing, but their entire economy is driven by exporting cheaply* made stuff to Wal-Mart.

      IOW you have it completely ass-backwards, and seem to think we had some huge trade surplus in the ’80s (!) which wasn’t true at all. In fact that’s when our trade deficits started to spiral out of control.

      *And when you look at all the problems we’ve had with Chinese junk–from poisoned pet food to led in our toothpaste to dry wall that makes people sick, it really ISN’T cheap in the long run!

    • 0 avatar
      mpresley

      BDB: Where’s China’s economy without exports to the United States?

      Well, let’s see? There’s Hong Kong, South Korea, Japan, Germany, Netherlands, Russia, Taiwan, UK, Singapore, Middle East.. Then, there’s a growing internal economy of mainland consumers. Should I go on, or do you get the picture?

    • 0 avatar
      L'avventura

      BDB, America’s big trade deficit with China doesn’t exist because we drive Geelys or use Huawei routers. Its because we use iPhones and buy products from Walmart.

      Sanctions don’t make American’s domestic manufacturing more competitive, in fact, it’ll make American products less competitive globally. We do sell those Chinese-made iPhones all over the world after all. Getting in a trade war will hurt American as much as China.

      Theoretically speaking, even if we stopped making all products in China, those manufacturing jobs won’t magically appear back in union shops in the USA. They will be displaced to other areas of cheap labor and manufacturing such as South East Asia, India, Latin America, or even Mexico.

      Sanctions and protectionism are only enablers of inefficiency.

    • 0 avatar
      BDB

      For reasons I won’t go into here for fear of starting a flame war, I would be thrilled to see those manufacturing jobs be in Mexico or Brazil rather than China.

      But wherever it’s done, the idea of outsourcing manufacturing to a place where you can do it as cheaply as possible (thus ensuring the people who make the iPods won’t be able to afford them) to export it to people who no longer have jobs because they left to China, but finance them with easy credit, is a shell game and will end very badly. It’s the $5 day turned upside down.

      Shorter me: Ross Perot may have been eccentric, but he was right.

    • 0 avatar
      L'avventura

      @BDB

      People in China will soon be able to afford iPods, and they did it by making iPods at “$5 a day”.

      Let’s put it this way, during the Industrial Revolution in Britain, the quality of life increased 50-75 percent over a lifetime, the Chinese quality of life is expected to increased 100-fold or 10,000 percent due to their economic growth.

      http://www.chinadaily.com.cn/bizchina/2008-08/28/content_6977384.htm

      Also, let’s consider that iPhone costs ~$170 or so to make, which includes bill of materials, the assembly is around $8. That same phone is turned around and sold to the consumer for $500-600 (phone prices are subsidized by the carrier). More then half that money goes to Americans, on the back of the that phone it says “Designed in California, made in China”.

      http://www.isuppli.com/News/Pages/iPhone-3G-S-Carries-178-96-BOM-and-Manufacturing-Cost-iSuppli-Teardown-Reveals.aspx

      Low-education, low-skill labor accounts for only a fraction of the money being made. That “designed in California” part is where the real jobs, the real money is at, and that’s still in America. A lot of this sounds obvious, but the equitable distribution of labor to best match the relative development and available skill set of each region is truly the humanitarian thing to do. Both America and China benefit.

    • 0 avatar
      dkulmacz

      L’aav…

      Just curious, not trying to be confrontational . . .

      Do you stick by your most recent argument when comparing the relative worth of a Fusion designed in the US and manufactured in Mexico, versus a Camry designed in Japan and manufactured in the US?

  • avatar
    chuckR

    Maybe a quid pro quo for GM/Opel and Porsche? Could they sneak that by the Brussels-ocrats?

    I am disgusted by the ridiculous rules used to determine the ‘mileage’. Looking out at my office parking lot, I see one each Expedition and Suburban. Also there are an A4, Cavalier, Crossfire, Saturn whatsis, a Dodge Intrepid and something else similar sized. The first four cars probably get mid-20s in suburban driving – I know the A4 does. The last two cars are probably around 20. The Expedition and Suburban likely won’t break 15. (A former co-worker couldn’t get his Expedition above 15 in highway commuting.) How many people does each carry on the daily commute? So why in hell is there a different standard for the ‘trucks/SUVs’ and the cars? And why are there footprint based standards for the cars? Don’t bother with ‘think of the poor farmers and tradesmen’. Farmers get gas/diesel tax rebates on Federal and state levels. And farmers/tradesmen are a small minority of those who purchase all the things classified as light trucks.

  • avatar
    Juniper

    Sorry Michael the world is changing. Evolve or die. The world doesn’t need Porsche any more than it needs Hummer or Saab. Get to work. They must stay up nights figuring how to make their small aerodynamic cars so friggen inefficient. Maybe you could get the Euro govts to give 100% tax credits to businesses that buy Porsches for company cars.

  • avatar
    JSF22

    Michael Macht is mostly right. The new CAFE formula was designed by and for the U.S. industry, not so much to keep foreign cars out, but so they could continue building their only (once) profitable products: low-fuel-economy vehicles with big footprints like Hummers etc. (That worked out well.) There was some recognition that while most vehicles with small footprints get good mileage, some do not; hence, the temporary “German exemption.” When it expires, it is hard to see how Porsche, or even VW, will have the political juice to get it extended, let alone made permanent. Macht needs to pray that some time between now and then the U.S. really needs something from Germany.

    The real solution is to repeal CAFE, tax gasoline up to $5.00 per gallon, use the revenue to rebuild the roads and bridges, and let people buy whatever vehicles they want. But now I am talking fantasy.

    • 0 avatar
      BDB

      A gas tax (with rebate for people below the poverty line) is most certainly the most sensible way to do this, but it’s a political non-starter. Half the Congress takes those silly “no new taxes ever” pledges, so we get weird stuff like CAFE at the national level and red light cameras at the local level to make up for them.

    • 0 avatar
      johnny ro

      Im with JSF here. On why, what to do and that its a non-starter. Similar answers are there for health care and education and on and non. JR

    • 0 avatar
      jkumpire

      JSF,

      I can’t afford $5 a gallon gas and stay in business. Pleas send me your address and checking account number so I can feed my family and pay the college bills.

    • 0 avatar
      John Horner

      I agree with you that a big gas tax is the most efficient way to reduce fossil fuel use. I guess that makes us “tax and spend Democrats” at heart :).

  • avatar
    bwell

    Come on, Michael. A little baksheesh in the right hands should take care of this. There are lots of deserving congressmen who need help this November.

  • avatar
    ihatetrees

    With all the loopholes in CAFE for trucks and SUVs, there’s gotta be a way to allow Porsche to operate. Couldn’t Porsche ‘take over’ Seat or some other minor Euro player and dump just enough of their small cars here to get around this crap?

    Either that, or Porsche needs to ramp up its political donations.

    • 0 avatar
      John Horner

      Maybe Porsche will deliver vehicles with snap on training wheel which artificially extend the wheelbase. Owners then would modify the vehicles by removing those extra wheels :).

  • avatar
    mtymsi

    I’m guessing that about 99.99% of Americans really don’t care if Porsche cars are sold in the U.S. Next case.

    • 0 avatar
      chuckR

      You may be wrong. It might be more like 99.95%. That’s still not the point. Maybe it is time to have a floating federal gas tax that keeps the gas price above $4 for a couple of model changeovers – 6 years or so – in order that car makers can plan on making more efficient cars that people will buy. This should include a moratorium on added safety requirements – cars are a reasonably safe product structurally already – even if some may be an electronics nightmare. It should also include a sunset provision so the law would have to be passed again. That $4 level should be inflation adjusted because we’re going to have some over the next few years. The proceeds could only be used for highway infrastructure repair/upgrades – maybe toss the greenies a bone of 5% diverted to their pet projects they don’t want to pay for or can’t pay for in any other way. Then if somebody wants to buy a Stupid Useless Vehicle- SUV, truck, Porsche or Corvette – god bless’em.

    • 0 avatar
      Maxb49

      Agreed. What if a foreigner in this country, as a guest, started bitching about our laws? The nicest Americans would tell them they are free to leave. Even more would assist them in leaving. In many cases, against their will.

  • avatar
    werewolf34

    Tough talk for a hedge fund that makes cars. Maybe Obama should go straight to the boss and talk to VW

  • avatar
    BMWfan

    I agree with the idea of a gas tax, but the people that are calling for a tax in excess of a dollar or so a gallon are not thinking this through. If we impose a gas tax of $2 or above, what happens to the resort areas that people drive to, or any business that relies on discretionary income? You guessed it, they go out of business. Dumping even MORE people into the ranks of the unemployed.Every action has consequences, and all potential solutions have to be carefully examined. If this is not done, you end up with what we have now, a bunch of clowns that do not suffer from the decisions they make.

  • avatar
    johnny ro

    356 was light and fast revelation. 911 is a beast. Can Porsche make a car thats worth a bit more than Impala and is light and kinda fast and smart?

  • avatar
    Maxb49

    In its fight against American CAFE rules, Porsche is ratcheting up the decibels.

    Boo hoo! Cry me a river. Porsche, you are a FOREIGN CORPORATION. Put up with our rules or GTFO.

  • avatar

    Porsche makes performance toys for a relative handful of upper middle class to rich gear heads. Post merger they have access to the VW parts bin. If the fines get too bad they can just badge engineer TDIs or an EV to balance out the fleet.

  • avatar
    jimboy

    Too bad Porsche, tough luck Mercedes, bye bye BMW. Surely with the ridiculous profit margins on your gas hog vehicles, you could figure out some way to improve their mileage.. Where is all that arrogant german engineering expertise? Comply with the law or stay home. North America has been far too lenient with foreign automakers who do not practice free trade in their own jurisdictions for far too long. We should be restricting Asian imports as well, until they open up their home markets to us. There is absolutely no reason on earth to let these manufacturers slide under the radar any longer. I’m sure their well heeled customers can pony up a few more euros to cover the cost, if not, move to Germany!

  • avatar
    John Horner

    It always amuses me when countries which run a massive trade surplus with the US scream “TRADE WAR, YIKES!”.


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