Germans Don’t Drive Their Chevy to the Levee

During his recent visit to Europe, President Donald Trump decried those bad bad Germans for putting the United States in a trade deficit and exporting those millions and millions of cars to the US. And of course there are no Chevies in Germany. Well there are a dozen things at play here that are wrong or shade the president’s view on world trade.

Certainly there are millions of German cars running the roads in the United States, although the German manufacturers don’t import millions and millions every year. In 2016, a year when about 17 million vehicles were sold in the US, the Germans sold 1, 335, 978 vehicles here. Now, not all of them were imported from Europe as Daimler, BMW and Volkswagen all have US plants and even export some of the vehicles assembled here. But in President Trump’s milieu they may seem more pervasive because they are expensive and most likely a far more common sight on the East Coast and around Mar a Lago. But here in the hinterlands, although visible, we are mostly driving GM, Ford, Toyota, Honda and Korean products galore…although I’d love a BMW in my dotage.

And General Motors did sell Chevrolets in Germany but pulled out of the market to concentrate on their Opel brand. So why didn’t Chevy sell in Germany. Most likely because General Motors couldn’t deliver a product that appealed to Germans at a price point that made sense. Essentially GM’s selection of cars offered in Europe and their marketing sucked. So does the president even know that GM had a European subsidiary? Opel on the continent and Vauxhall in the United Kingdom? Given his lack of knowledge in general and economics outside NY real estate, it’s probably a sure thing. But another indication that GM rather than the Germans is at fault for lack of sales, GM’s attempt to revive Opel was an utter failure and they recently sold Opel to Peugeot and have essentially abandoned the European market.

So one last thing. Unlike President Trump’s complaints about trade deficits with China and Mexico, Germany isn’t a low cost of production nation. As a matter of fact labor costs are substantially higher than in the United States given the social services (i.e. health care, education, parental leave, childcare, labor unions, etc) available to their residents. So they are competing on not price but on better quality, service and marketing. You certainly can’t find fault with that.

So once again when talking about international trade issues…the president has barely a clue. And I am not even getting into the fact he wants to negotiate a new trade agreement with Germany…ever forgetting that trade is handled by the European Union!

So when the levee breaks, Germany is driving away in Jettas, not Aveos!


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