Can German Auto Companies Keep Competitive Their Advantage?

Can German Auto Companies Keep Competitive Their Advantage?

24/7 Wall St.

BMW-logo-hoodGermany auto workers are not low paid by the standards of almost any other auto workers in the world. That may not matter as much as it does in other nations. German luxury cars have high profits because of high sticker prices. Volkswagen has huge production facilities, which aid efficient labor forces, because it is the largest car company in Europe. However, recent increases in worker pay could catch up to the margins of these Germany companies, robbing them of their efficiencies and profits.

VW workers have just gotten large raises. According to Reuters:

Salaries of workers at VW’s six western German factories and the financial services division will be raised by 3.4 percent from September, followed by another 2.2 percent increase from July 2014, VW said.

That is a significant set of raises in an economy where inflation is nearly nonexistent.

German car companies have moved further down…

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