ANALYSIS: Germany’s scandal-plagued car makers are a drag on the economy
Frankfurt — Germany’s lingering car maker scandal is taking its toll. In many ways, Europe’s largest economy is looking pretty solid, with record-low unemployment and booming exports telling the story of seemingly effortless expansion for most of the past three years. Yet a survey published on Tuesday showing a bigger than expected drop in investor confidence specifically cited car manufacturers’ woes — rigging of emissions software and allegations of cartel-building — as a major factor. The industry’s crisis may go well beyond besmirching the reputations of stalwarts such as Volkswagen and Daimler’s Mercedes-Benz and attracting the ire of Chancellor Angela Merkel. While Germany is famed for the small and medium-sized enterprises dotting its heartland, its economy still relies greatly on the fate of a few large companies, according to Goldman Sachs economist Pierre Vernet.
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