BERLIN — The “Made in Germany” label has stood for precision and reliability for decades, but since Volkswagen admitted to cheating on U.S. car emissions tests, many are questioning whether the automaker’s problems could taint the rest of the country.
It’s the second serious blow to a major German company’s reputation in six months, following the tragic crash of a Germanwings jet that killed 150 people. Parent company Lufthansa has faced questions over why it failed to identify the psychological issues suffered by the pilot who intentionally flew the plane into a French mountain.
Will such crises tarnish the hard-won, valuable reputations for quality of other German brands, such as BMW, Daimler or Bosch?
Experts say VW’s problems could hurt the economy in the short term due to the company’s sheer size, but that long-term damage to the country is unlikely.
That doesn’t mean others won’t try to capitalize. Companies will try to grab market share. And across Europe, people in countries that have been lectured by Germany for years about the virtues of financial honesty could be feeling smug.
“Not only does this make Germany look bad, I think that Germany has been very good at moralizing to the rest of Europe about the financial crisis and other things,” said Michael Hewson, chief market analyst for CMC Markets in London.
“Germans have a word for it — ’schadenfreude' — and Germany’s getting a big dose of it now,” he said, referring to the German word for taking pleasure at the misfortune of others.
Carsten Brzeski, an analyst with ING in Frankfurt, said while “the reputational damage is currently impossible to assess,” because of its size even if the main impact of the scandal is limited to Volkswagen it could have serious economic effects on the German economy overall.
“While the German economy defied Greece, the euro crisis and the Chinese slowdown, it could now be facing the biggest downside risk in a long while,” he said in a research note.
Analysts say there is the possibility that the fallout from the scandal might affect other car companies, whether through the need for tougher regulation or a shift away from the diesel engines at the center of the U.S. scandal.
Vice Chancellor Sigmar Gabriel told reporters at the auto show in Frankfurt after the news broke that the VW scandal would mean nothing to the “Made in Germany” label — before adding “I hope.”
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