Volkswagen and Daimler to Merkel: Spiff Our Rides

Steph Willems
by Steph Willems

Amid steep drops in operating profit and a dismal sales outlook, both Volkswagen and Mercedes-Benz parent Daimler are appealing to the state in a bid to generate sales demand.

Both automakers appealed to the German government for assistance on Wednesday, Reuters reports, ahead of a meeting of auto industry leaders. With vehicle production making up a big part of Germany’s GDP, the shutdowns enacted to slow the spread of COVID-19 has left the sector hurting. That pain is expected to last through 2020.

Volkswagen expects 2020’s annual production figures to come out 20 percent lower than in 2019. Earlier in April, the automaker reported an 81-percent drop in operating profit for the first quarter of the year. Daimler’s Q1 operating profit plummeted 70 percent.

With plants shuttered and demand dried up in many markets, the automakers predict a global recession that will hamper sales even after countries remove lockdown orders and dealers open their doors. It’s their hope that Germany’s government could help out.

“A simple incentive would be effective,” Daimler CEO Ola Kaellenius said during an earnings call. VW’s all aboard that idea, with the company’s chief financial officer, Frank Witter, saying, “We need a swift decision on buyer incentives.”

“This decision is ultimately reserved for the annual general meeting and will of course continue to be subject to review depending on the further development of this year, whether momentum, confidence and thus results and liquidity return,” Witter said.

[Image: Daimler AG]

Steph Willems
Steph Willems

More by Steph Willems

Join the conversation
4 of 6 comments
  • Jkross22 Jkross22 on Apr 29, 2020

    Why should Mercedes or VW benefit from a bailout and have the average Johan pick up the tab?

  • Inside Looking Out Inside Looking Out on Apr 29, 2020

    US Government has to be involved too. Our masters needs German cars, we cannot fail them. I mean we cannot let German car makers fails.

  • Dusterdude Dusterdude on Apr 30, 2020

    Rather than approaching the German government ( taxpayers) , they may want to look at there staffing levels first ... between the two companies , they have close to a million employees...

  • RHD RHD on Apr 30, 2020

    If they could get a refund on half of the fines paid for their diesel emissions cheating, they'd be fine. They deserve the mess they find themselves in. Don't come whining, you made your bed, now sleep in it.