Merkel says car industry must work to rebuild trust

[September 14, 2017]  By Emma Thomasson

FRANKFURT (Reuters) - Chancellor Angela Merkel said Germany's car industry should do everything in its power to repair its damaged reputation, pointing to the combustion engine's uncertain future as she opened the Frankfurt motor show.

The country's auto sector was plunged into crisis two years ago when Volkswagen admitted to cheating U.S. diesel emissions tests.

"A lot of trust has been destroyed. That is why the industry must do everything to win back confidence, in its own interest and that of employees and German industry," Merkel said on Thursday.

Merkel noted that the emissions scandal had broken just after she opened the same show two years ago. The industry now faced many challenges, including suggestions that China might eventually ban combustion engines, she said.

Ahead of a national election on Sept. 24, Merkel has come under fire for her close ties to automakers and for failing to crack down on vehicle pollution following VW's admission.

VW, BMW <BMWG.DE>, Daimler <DAIGn.DE>, Audi <NSUG.DE> and Porsche have since come under investigation by European regulators for alleged anti-competitive collusion.

The chancellor has taken a tougher line on the industry in recent weeks and urged it to agree measures to tackle pollution in cities, this month setting up a 1 billion euro fund to clean up urban transport.

Britain and France have also announced plans to eventually ban all diesel and petrol vehicles, while Tesla has launched its first mass-market electric car.

German chancellor Angela Merkel sits speaks with Audi CEO Rupert Stadler during the opening of the Frankfurt Motor Show (IAA) in Frankfurt, Germany September 14, 2017. REUTERS/Ralph Orlowski

Matthias Wissmann, head of Germany's VDA auto lobby that hosts the car show, said regaining trust was the industry's "central objective".

The industry had not made things easy for its political allies and some companies had made serious mistakes, added Wissmann, a former member of Merkel's conservatives and federal transport minister from 1993 to 1998.

Merkel predicted that combustion engine cars would still be needed for decades as demand was booming in many parts of the world, while she noted German automakers were also making strides to roll out new electric models.

On Wednesday, auto suppliers and manufacturers said Europe should not rush to abandon the combustion engine and must build up its own production of electric car batteries to compete with China.

(Reporting by Emma Thomasson; Editing by Michael Nienaber and John Stonestreet)

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