November 12, 2008 at 2:00 pm by Tom Lydon
Germany’s economy depends heavily on its exports and with the slump in auto sales, the economy and exchange traded fund (ETF) are looking bleak.
As the world’s number one exporter, Germany has relied for years on the sale of cars, precision parts, fine watches and a host of other products to fuel its economy, reports Henry Chu for The LA Times.
As the roving financial crisis spreads worldwide, more consumers and companies are hoarding their money rather than spending it. Industries across Europe that expected strong sales growth this year are frozen, as the economy has been scarred by uncertainty. Germany did pass a stimulus package last week, however, to stem the tide.
A normally frugal Germany has just learned to spend after a few years of stronger than expected growth. But after free spending similar to the united States and Britain, Germans are now forced to close their wallets. The first industry to feel the pain is the auto industry, which serves as a bellweather for the rest of the economy. A car is the most expensive item most Germans will ever own, as many rent their homes.
Meanwhile, figures released this week show German car exports fell in October 10% from the same month last year; domestic sales dropped 8%. Sales of German cars in the U.S. have fallen drastically, also.
What can drive the iShares MSCI Germany (EWG) to greener pastures? Time and the rest of the world will have to decide. It’s down 49.7% year-to-date. Daimler is 4.9%; Volkswagen is 6.5%.
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December 20th, 2008 at 2:18 pm
The 1970s oil crisis should have been the telltale sign for Detroit. Did they heed the warning? Nope. Dummies kept building bigger and bigger. Then comes the $4 a gallon gas. The writing has been on the wall for decades. They could have led the world in changing the whole industry but they didn’t. Now the government has just doled out $17 billion. 100 bucks says that they come crying back sometime next year with their hands out again - blaming the unions for their woes. And if they do, they might have a beef. The unions better wake up to the real world of the 21st century too.
January 6th, 2009 at 5:51 pm
The problem lies in the fact that the oil companies don’t want electric cars so the kickbacks to the Big 3 have been flowing for decades. It doesnt that people kept buying bigger and bigger cars during the 80s and 90s. I mean, who really needs a hummer anyway.