Neoliberalism and The Automobile Industry

One reason for the silence over the social market economy is that the boom-slump cycle of neoliberalism makes for a very bumpy ride, in which the rich grow richer and the poor grow poorer. This is best seen in the automobile industry and its concentration in Detroit.

The case of Scania

The relationship between Volvo and Scania is a case which I have followed with interest. If ordoliberalism was still determining policy, then the main concern would involve keeping businesses as small as possible: just as was done with banks. This element has gone by the board. This began some 14 years ago with the attempt by Volvo to buy Scania, both then large truck and bus companies and both Swedish-owned.

Recently, Volkswagen Trucks and Buses bought up Scania. I begin by using Wikipedia to flesh out the history on this:

“On 7 August 1999, Volvo announced it had agreed to acquire a majority share in Scania. Volvo was to buy the 49.3% stake in Scania that was owned by Investor AB, Scania’s then main shareholder. The acquisition, for $7.5 billion (60.7 billion SEK), would have created the world’s second-largest manufacturer of heavy trucks, behind DaimlerChrysler. The cash for the deal came from Volvo selling its car division to Ford Motor Company in January 1999, but the deal had yet to be approved by the European Union.[11]

The deal eventually failed, after the European Union had disapproved of the affair, saying it would create a company with almost 100% market share[12] in the Nordic markets.”

Aborted MAN takeover

In September 2006, the German truck maker MAN AG launched a 10.3bn hostile offer to acquire Scania AB. Scania’s CEO Leif Östling was forced to apologise for comparing the bid of MAN to a “Blitzkrieg“. MAN AG later dropped its hostile offer, but in January 2008, MAN increased their voting rights in Scania up to 17%.

When this was decided the EU still had a social market perspective.

Scania ownership today:

MAN has recently increased its stake to 90% of Scania, making it by far the biggest truck and bus conglomerate in the EU.

The two major stockholders of Scania AB (publ) are:

  • The German automotive company Volkswagen AG is Scania’s biggest shareholder, with a 70.94% voting stake (equity) in Scania.[13] It gained this by first buying Volvo’s stake in 2000, after the latter’s aborted takeover attempt, increasing it to 36.4% in the first quarter 2007,[14] and then buying the remainder fromInvestor AB in March 2008.[15] The deal was approved by regulatory bodies in July 2008.[12] Scania then became the ninth marque in the Volkswagen Group.[16]
  • The German truck manufacturer MAN SE holds a 17.37% voting stake in Scania.[13] Notably, Volkswagen AG[12] also owns 75.03% of MAN.

What can we conclude from this in relation to ordoliberalism?

Keeping banks small is easier than keeping big businesses small, by virtue of the different    nature of banking as against other companies which must compete with overseas conglomerates. Non-banking enterprises are world-wide in their operations. Big fish eat small fish without regard to state boundaries. Since 1980 we live in a world dominated by neoliberal free-for-all.

Volvo was taken over by Ford in 2000, and in 2010 Ford in turn sold the company to the Chinese Company Geely Automobile. Ford itself, based in Detroit, remains with elements of it operations following the Wall Street Crash of 2008 as a result of the subprime mortgage crisis, in the wake of which much was lost by Ford, making it difficult to follow the details of purchases and sales of subsidiaries. No doubt the boom-slump cycle is continuing, until such time as this particular neoliberal bust has become a new boom.

It is worth seeing the following website for an estimate of how many new cars this involves, and for pictures of the vast parking areas of unsold used cars: None of them will ever be sold, even those not stuck in the middle of the vast areas of dumped cars. It would be to expensive to get them out, insure them and pay any road tax, then clean them and sell  them at a low price. They will rot there for ever.

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