Introduction to the Nürburgring
The Nürburgring in the western hills of Germany is the longest permanent race track in the world. It is almost a century old and has hosted many Formula 1 Grand Prix races. The main part of the route is called the Nordschleife. The 20.8 kilometer (12.9 miles) long route is nicknamed the “Green Hell” – because of the surrounding forests of the Eifel region and its challenging route.
Test on the Racetrack
All major automobile manufacturers have test centers at the Nürburgring. In fact, testing cars was an important reason for the track’s construction in 1927. The German automotive industry has used this heritage and the speed limit Autobahn, Germany’s public highway system, to its advantage in advertising and brand building. Brands such as Mercedes-Benz, BMW, Audi and Volkswagen stood for precision technology, performance and reliability. They weren’t just cars – they were cultural icons and the backbone of the German economy.
Lost Wonderland
The German automotive industry employs over a million people and has long been a barometer of economic health. In 1950, German automobile manufacturers sold around 200,000 vehicles. Today around 14 million copies are sold worldwide. For decades, the formula was simple: first-class technology plus global demand led to success. But the good times are over. Sales are shrinking, jobs are being cut and factories are facing closure. “The pressure is increasing, the cost savings are enormous,” said a Mercedes employee who did not want to be named. “It’s all about cost cutting.”
China: From Gold Rush to Lost Ground
China was the promised land for years. In the 1980s, China’s political leaders invited Volkswagen (which means "people’s car" in German) to set up joint ventures and build cars in China for the Chinese people. There was a time when Volkswagen’s market share was almost 50%. Other car manufacturers later followed suit. The more China’s economy grew, the larger the country’s car market became. Until a few years ago, German car manufacturers sold one in three cars in China. “It was a gold rush era,” remembers Beatrix Keim, who spent two decades at VW in China and is now director at CAR, an industry consultancy in Duisburg. "Sell a lot of cars, make a lot of money. There wasn’t much Chinese competition."
China’s Chance to Overtake German Car Manufacturers
But China had a plan: learn from foreign partners and then lead. In 2009, Beijing passed a law on electric vehicles. “It wasn’t really climate change,” Keim explained. “It was about finding a technology where China has a chance to overtake foreigners and where China can thrive.” The German car manufacturers did not expect this, she added. They underestimated the determination of the Chinese leadership and the speed of development. Billions in subsidies and infrastructure later, China is now the world leader in electric vehicles and batteries.
Can India Fill the Gap?
When you observe the heavy traffic in Chennai, a city in southeastern India, you rarely see a German car. Indian, Japanese and Korean cars dominate the streets of the city, often referred to as the “Detroit of India” because of its many car factories. The BMW plant in Chennai only produces around 80 cars a day, while the car manufacturer’s German flagship produces 1,400. Still, growth is strong – over 10% annually. “There is a huge rush on the Indian market,” said plant manager Thomas Dose. “Everyone has the feeling: If we are not in India now, we will miss an opportunity.”
Lessons Learned – or Too Late?
Beatrix Keim believes that German car manufacturers are striving for change. “They understand that they have to move faster, come down from their ivory tower and learn,” she said. Meanwhile, the race to build successful electric vehicles is in full swing. In China, local electric vehicle manufacturers are struggling with overcapacity and falling prices. They are also trying to sell their electric vehicles in Europe, with limited success so far. But electric car makers from China and elsewhere are testing their cars at Germany’s Nurburgring, a symbolic turn in a tale of lost dominance. Could German car manufacturers completely miss the boat? “It can happen,” said Racing Misha Charoudin. “Look at you [Finnish mobile phone maker] Nokia. They were fine. And then suddenly they missed the boat.”
