Particulates catch German auto industry on the wrong foot

The whole of Germany is currently discussing the potential health risks posed by fine particulates. The background is an EU directive issued in 1999 that laid down the maximum permissible ambient concentration of harmful fine particulates. Although these values have applied since the start of 2005, the limits have already been exceeded in many German cities. This report by Deutsche Bank Research reveals how the German automobile industry is largely being held accountable.

Although the current outcry regarding the thresholds being exceeded and the criticism of the managers in the German automobile industry appear to be exaggerated, it cannot be denied that the jewel in Germany’s industrial crown has evidently underestimated public sentiment regarding this sensitive ecological topic. According to the report by Deutsche Bank Research, the problem stemmed from two misguided beliefs:

• The industry was under the impression that it could solve the diesel engine soot problem using an alternative, more complex technology. 
• The German automobile industry was mistakenly convinced that they could allay the concerns that had been raised with their voluntary commitment to fit all new diesel cars with a filter by the end of 2008. 

Conversely, the industry ignored a simple solution. By quickly introducing and effectively marketing a supposedly low-tech particle filter their French competitors offered a way of reducing particulate emissions to almost zero. This method is gaining broad acceptance as the filter is supplied at no extra cost.

Now that the German automobile industry is finally working at maximum capicity in order to equip its diesel vehicles with filters, there are three main challenges to contend with: 

• Firstly, there are bottlenecks in the supply of particulate filters as the autoparts makers have insufficient capacity to satisfy the sharp increase in demand. This undermines the German motor industry’s most important driver apart from exports – the sale of diesel vehicles. The market share of diesels has grown massively in some cases in Europe in the last few years thanks to lower fuel prices and technological improvements; German manufacturers in particular have been major beneficiaries of this trend to date. 
• Secondly, the image loss particularly relative to French competitors should not be underestimated. 
• Thirdly, many of the measures currently being discussed to ensure compliance with these limits are aimed at the automobile industry (e.g. driving bans). Ultimately, the hesitancy of German automakers is likely to negatively impact unit sales this year.

The proposed countermeasures suggested so far have ranged from (temporary) driving bans for diesel vehicles right through to regular wet cleaning of roads in order to bind the fine particulates. 

To read the full report, click here.