Government Role In Automobile Industry

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What is the government’s role? Does it completely control/own a majority stake in its production? Has it enacted any policies to support/constrain it? - Role of government and Stake in production The German automobile industry is a private sector industry. The government does not have any role in the production or sales of this industry as such. It is safe to say that the automobile industry was born here with Karl Benz 125 years back. The government has no stake in the production of automobiles in the country i.e it is completely profit driven. Some key players of the industry are: Audi, BMW, Volkswagen, Mercedes, Opel, Porsche and Ford Germany. The government however has a major role in the legislations related to this industry. - Policies…show more content…
In recent years, the German government has implemented root and branch reforms of the tax system to make the country the most sought after business location. The German tax system allows for differing tax rates in German municipalities. On average, corporate companies face an overall tax burden of less than 30 %. This makes Germany’s corporate tax system one of the most competitive tax systems among the major industrialized countries in the world. Impact on the economy? - Has it had any linkage effects – promoted any other industries (that supply inputs to it/use it as an input)? Has it been instrumental in the country’s growth story? 1. Impact on the Economy Last year marked the 125th anniversary of the birth of automobile in Germany. Germany continues to occupy a unique position in the international automobile industry. • The automobile industry is the largest industry sector in Germany. In 2013, the auto sector listed a turnover of EUR 361 billion, around 20% of total German industry revenue. • 1 in every 5 cars worldwide carries a German brand name. • The automobile industry is one of the largest employers in Germany, with a workforce of around 712,500 in…show more content…
To be precise, the fact that Germany is heading towards electric mobility of vehicles, there are various industries that will be setup in this respect giving the economy an overall push in the upward direction i.e for electric cars or battery operated cars factories for producing efficient parts of such cars will need to be made which will lead to the setup of factories producing these units leading to generation of employment and hence development. This is called the trickle down effect in which the benefits of one layer on an industry percolates to other layers of the industry causing an increase in overall economic growth. Has it been instrumental in the country’s growth story? The automobile industry has boosted the growth of Germany. Irrespective of the fact that the overall growth of Germany in other sectors wasn’t as good the automobile industry continued to flourish due to its export inclined trade pattern. • In 2009, global economic production fell for the first time in 6 decades. Global demand for cars fell by 4 %. Germany did not go unaffected by the worst international financial crisis in recent times. The German economy has however proven particularly robust in the face of the turbulence that had hit demand and trade across the globe. As Germany’s key industry, the automobile sector in particular has shown the way out of the international

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