The German luxury carmaker is stocking up on parts that require natural gas to produce. This is to hedge against the possibility of gas being rationed.
The company makes parts for transmissions or axles in advance at its plant in Untertürkheim, near Stuttgart, to build up stocks at its factories in the United States and China. If a gas shortage leads to a shutdown of the carmaker’s operations in Germany, the plants in the US and China would thus be able to continue production.
More core companies are preparing for gas rationing
German carmaker Volkswagen is also considering shifting production from Germany and Eastern Europe to other countries in the event of persistent gas shortages. South-western Europe or coastal parts of northern Europe, where there is better access to maritime supplies of liquefied natural gas (LNG), could benefit from a shift in production.
The German Government is doing its utmost to protect households and industry during this energy crisis. We can see large aid packages to residents or, for example, help for companies in trouble, such as the airline Lufthansa or Uniper.
Despite the success of the plan in filling their gas storage facilities, we are now seeing reports from Germany that new household deposits are sometimes up to 35 times higher than the original ones. So there will probably be gas in Germany, but it will be really expensive. If expensive gas is going to put households into existential problems, we can expect further action by the German Government to help citizens and businesses.
Producer prices in Germany rose 46% in August, which in itself raises major concerns about the next growth spurt in the German economy. Indeed, if German products continue to rise in price at a similar rate, they will become highly uncompetitive and Germany’s export balance could deteriorate significantly. And, unfortunately, even higher prices are likely to come.