German car manufacturing and exports in the Third Reich

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Oracle
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Adam Opel AG

Post by Oracle » 17 Dec 2006 10:41

I have some information about the involvement in General Motors in the volks wagen scheme that might interest.
General Motors World, June 1934 referred to James D Mooneys' [President of General Motors Overseas Operations] discussions with Hitler on 1 May 1934. JDM was in Berlin at the time on a European trip, and apart from visiting Berlin, he also visited London. The 1st May was celebrated as the first anniversary of the German ‘New Deal’ under Hitler’s guidance. JDM was invited to see Hitler’s landing at Tempelhof airfield, and the triumphal motorcade to the Chancellery. The next day, JDM was invited to meet the Chancellor and was accompanied by Ronald K. Evans and R.A. Fleischer of Opel. They discussed the automotive industry in Germany, and Opel’s important place in it as the leading manufacturer of cars. Hitler characterised the 1.2 litre Opel [the Model P-4] as his conception of the true Volks wagen, the car for the German masses. The G.M. men apparently thought that this was welcome news as many interpretations of what Hitler would consider a Volks wagen had leaned towards a baby or cyclecar class vehicle, as per Porsche’s first attempt through NSU. Hitler definitely stated that any car giving less package size and less performance than the 1.2 litre Opel ‘would be an imposition upon the German people’. Hitler estimated that using the U.S. as a standard, Germany should have 12 million cars, but realised that the difference in conditions would make 3 million more logical.

In a discussion on how to benefit more German families to enjoy the benefits of car ownership, Dr. Fleischer demonstrated to Hitler that whilst the buyer paid only RM1,880 for the 1.2 litre Opel saloon, he had to spend an additional RM7,700 in operating costs during the expected seven years of use. Simply reducing the acquisition cost would not make much wider use of cars that Hitler was calling for. The Chancellor then admitted that this was valid, and said that he would definitely see to it that operating costs were reduced. There was no logic in a small and dark garage costing RM30-40 per month when comfortable furnished rooms were available at RM25. To bring down garaging costs, he promised to rescind the rigid building regulation regulations relating to garages, as well as making street parking legal. Hitler also asked that Opel’s experience with car insurance be placed at his disposal as he thought insurance costs could also safely be cut. He also mentioned the possibility of reducing gasoline taxes and prices to accelerate Germany’s motorization.

Anita Kugler comments that the Reich foreign ministry notes state that JDM was supposed to receive assurances according to Reich Foreign Ministry notes dated 13th April 1934 that the Führer would ‘allow no discrimination against foreign capital invested in legitimate business pursuits in Germany. That also applies, despite the special German interest in advancing the German motor vehicle industry, to the capital of General Motors and similar companies. He naturally expects that German capital abroad is just as secure’. Hitler’s promise was not broken, she says, and Opel had been treated as though it was a German company . However the evidence shows that as a result of the meeting in probably the previous February plus the requirements laid down for the German automotive industry that arrangements for a formal invitation had been made in order to meet Hitler some weeks beforehand.
The 2nd July issue of the U.S. magazine Newsweek published a photograph of several hundred Opel Kadett and Olympia cars outside Dock Shed 108 at Southampton Docks, a stone’s throw from the GM Limited plant which was then in the course of being constructed. Also, a front cover of a pamphlet issued to British firms by the Empire Industries Association, entitled ‘THE GERMAN CAR INVASION: The facts disclosed in the following pages prove not only that the British Motor Car Industry is in the gravest peril, but that the same threat hangs over nearly every other Industry in Great Britain’. Evidently, matters had come to a head since the previous report, or perhaps just more information became available. The claim was made that subsidised exports were becoming of great concern in the U.K. The problem had come to a head by the flood of German Opel automobiles that came into the U.K. in the first three months of 1938. Government authorities had protested publicly that the sharp decline in imports of cars in April 1938 indicated that it was due to an abnormal condition and would not be repeated, but that they were secretly worried over the implications. The controversy had reached The Times and they referred to a column by E. de G. Carr. Carr had stated that during the two years ending the summer of 1937, he was commercially concerned in the importing into the U.K. of a ‘well-known make of German car’. During this period he had attended many business conferences in Germany when subsidies for exports were made no secret of. The amount of the subsidy was as a result of a negotiation and agreement with the administrative authorities and was governed by a variety of considerations, including the nature of the commodity, the duty and freight charges and the competitive conditions in the importing country. The export price ex factory was lower to the U.K. than to some, but not all other countries. The introduction of the small FIAT [the Topolino or 500], which sold at a [subsidised?] low price was the occasion for an application for an increase in the subsidy allowance. The FIAT 6.7 h.p. 500 Saloon was priced at £120, and £131 for the de luxe version, and the larger 11.4 h.p. Balilla 1,100 [1,089 c.c.] four-door saloon was £198 .

The difference between the export prices and the German retail list prices varied appreciably according to the model but showed an average discount of about 60%. Experts claimed that German manufacturers were forced by the German Government to undercut export prices sufficiently in each foreign market to reach a planned figure of export trade. The bureaucracy even allowed for a levy on the domestic sales of textiles to supplement the levy on domestic auto sales if required. It was British concern that German export subsidies had gone far beyond the field of the individual industries concerned and that the Government would minutely regulate them. The flood of Opel cars into the U.K. in the spring was suggested to be but a taste of what was coming in other product lines. ‘Scouts’ were suggesting that there was no doubt that the Germans intended to export the new Volkswagen on a large scale. Observers were suggesting that these ‘flivver’ exports would amount to 50% of production if this was necessary in order to build up foreign exchange accounts for the purchase of raw materials abroad, and that consequently the German people would see less of their ‘People’s Car’ than the people of other countries! If this was true, then U.S. manufacturers would be equally concerned over the long-term trend of German competition....

Technical Editor The Motor magazine, Laurence Pomeroy wrote on his suggestion sfor a "mini motor" twenty years before Alec Issigonis's Mini, in the 31st January 1939 issue:
Pomeroy stated that all over the world quantity-produced cars were sold on the basis of pence per pound: the easiest way to make cars lighter was to make them smaller. Reducing wheelbase and decreasing engine size would lower depreciation, improve fuel consumption and reduce taxation and insurance. Taking the then current 1939 Model cars, the 8 h.p. range would then cost 20% less than the 10 h.p., and the 10 h.p. range of cars then cost 15% than the 12 h.p. Pomeroy called for a new sub-8 h.p. car, a 6 h.p. which would sell for £90. ‘Such a reduction in price will alone ensure tremendous sales, for past experience shows clearly that price and volume are closely related.’ In 1929, the cheapest 10 h.p. car was priced at £189, and in 1936 £135, though the 1936 Model were nearly ten times that of the 1929 Model. Pomeroy took a leaf out of Lord Nuffield’s book [William Morris of Morris Motors] : he claimed that the British 6 h.p. car would ‘ensure the retention of our home and export market in small cars in the face of competition from the German Volkswagen, which will be put on the market next year’. The Volkswagen was stated to sell for just under RM1,000, which meant that if it was marketed in the U.K. at a sterling price comparing in price the same ratio to that of ‘another well-known German imported vehicle’ [i.e. Opel Kadett!], it would retail at a little over £100. Using the last known quoted Reichsmark/Sterling average rate of 12.17, the Kdf-Wagen would have been on the market at the equivalent of £82.0.0. or so, and therefore the calculated figure of £100 would have included, as per Opels, import duty at 33 1/3%, shipping, profit margin, etc. and must therefore have involved a hefty subsidy: if the 1938 prices held sway in 1939, the Kadett actually sold at RM1,795, considerably more than the KdF-Wagen was intended to sell at. Although output of the Volkswagen would be initially absorbed by domestic demand, it was a potential competitor that had to be treated with considerable respect. The German Labour Front, the Volkswagen’s sponsors, had tremendous resources in money and brains, and the organisation was relieved entirely from both normal commercial anxieties in selling and from other overhead charges. Pomeroy believed that from the viewpoint of the British market and Britain’s export trade, the economic case for a British car of around 6 h.p. was clearly established. His ‘Mini-motor’ echoed Alec Issigonis’ Morris Mini-Minor and Austin Seven of 1959, although the engine of the 1939 ‘Mini’ would have a capacity of 600 c.c. as against the Austin-design A-series 850 c.c dating to 1955, and would have a power output of 18 b.h.p., practically the same power as a typical 8 h.p. car of 1935-36. However, the 1939 car would out-perform the earlier models because of lighter weight, etc. If Pomeroy had any concerns over the competition from Opels, he would have said so. However, he highlighted the genuine concern that the KdF-Wagen would be so cheap, with levels of subsidy applied to Opels that it would sell in Britain and by implication in traditional export markets because it was affordable to the proportion of the populace that bought the cheapest cars....

.....The Motor 7th March 1939 mentioned that if the Volkswagen was marketed in the U.K., then despite its then 986 c.c. engine, it would be rated at a ‘hefty 13 h.p.’ because its engine measured 70 x 74 mm, representing a Tax charge of £9 15s [£9.75]. Thus Pomeroy’s concerns over the perceived threat over the Volkswagen must be wrong: the 13 h.p. rating would, as with the Opels, be perceived as a more expensive car to run than 8 h.p. British cars that cost more to purchase new. Pomeroy was the Technical Editor of the magazine, and it is suggested that he did not make a rated horsepower calculation because he did not have the figures in front of him, and the magazine corrected themselves quietly when they had the correct information....

.....General Motors World January 1937 announced the new Opel Kadett/Cadet/le Cadet, shown first at the Export Sales Meeting at Rüsselsheim in early November 1936, and which made a ‘highly favourable impression upon the representatives of the overseas plants’. On 3rd December the Kadett was displayed and introduced to the German press at a large reception in Berlin. Within eight days after the car had been shown to the German dealer organisation, 6,000 orders for Kadett models had been received at Rüsselsheim, a figure never before equalled on any new model in a similar period after its introduction. The new Kadett was to fit between the P-4 and the Olympia which sold at RM1,000 [£175 in the U.K. list price], which suggests that the quotation of the price was wrong: it should have been RM1,175 although RM1,000 was the intended selling price of the KdF-Wagen. If the price quoted had been correct then this presents an interesting scenario: Adam Opel A.G. being able to actually sell the most basic Kadett at the price of the Volkswagen, then British motor industry should have been very concerned along with many other countries. That this is never likely to have been achieved is because of the power of the National Labour Front as sponsors of the KdF-Wagen.

The U.S. attitude to the threat of the Volksauto can be summed up in a Memorandum by the Adviser on International Economic Affairs who seems to have been sent every scrap of paper relating to German, Australian and U.K. trade produced by the arms of the State Department and U.S. Embassies.

That said the Opel Kadett could have competed in theory, albeit without the benefits of the savings accounts that the KdF-Wagen. Photographs of a revised Kadett numbered 38/4996 of 1938 show a study of a new two-door 1.2 litre 4-cylinder [1195 c.c.]. The front end is reminiscent of the 1939 Buick although the rest of the body is pure Opel. A subsequent design study is of the ‘Kadett 40’, from 1939, i.e. a 1940 Model ‘K40’ or ‘KJ40’. This was again a two-door model, but with detail differences that arguably show the influence of the U.S. Light Chevrolet Project 195-Y-13, etc. of 1937. It would appear that the 1938 Study was more of a development of the 1937 unitary construction cars, and the 1939 Study the recipient of input to make the styling more ‘American’ and much more like the Detroit designs. Whereas the 1938 had rear bumpers, the 1939 had a spare mounted at the rear without cover, and no bumpers: altogether, a much more attractive model. According to a September/October 1939 General Motors Corporation document, 1939 Model Kadett Standard and Kadett de Luxe [Kadett Normal KJ38 and Kadett spezial K38] assembly was to end on 20 November 1939. The new model series Kadett 4400 ‘with increased roominess’ was to start production on 1 February 1940, including 2-door Cabrio-Coach, i.e. 2-door convertible coach. The new Kadett had a larger capacity 1,195 c.c. sidevalve unit [72.9 cu. in.] with a 6.75:1 compression ratio compared to the 1938-9 models. The Kadett Series 4400 had a 93.1 in. wheelbase, up by 1 inch with a 46.5 in. front tread, up 3 in., and 48 in. rear with a 2 in. increase. The overall length of the body was increased by 3.7 in. to 153.7 in. Right-hand drive equipment was optional and there was a possibility for the installation of defroster equipment, heater and radio. The failure to proceed into production after the 1939 Kadett models actually ended in February 1940 is attributable to the fact that they had little or no military value compared with the Olympia series.
You can see that the KdF-Wagen was perceived aborad as being intended to be exported, with it was suggested, 50% of production for export. Whether this was ever actually intended I have no idea, but it if was indeed true then how on Earth were the Sparkate scheme savers ever going to get their cars? My information has it that until August 1940, a grand total of 54 KdF-Wagen saloons had been built, plus six cabriolet cars, and all were used for testing purposes or handed to high-ranking officials. Official production started 11 July 1941, with first cars delivered 3 September, and final production was 7 August 1944 after 630 saloons and 13 cabriolet cars had been built for the military or government departments. Is this correct?
Last edited by Oracle on 18 Dec 2006 08:04, edited 1 time in total.

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Matt Gibbs
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Post by Matt Gibbs » 17 Dec 2006 23:12

Your figures are approximately correct for manufacture of the KdF wagen saloon from other books I have read. But I wonder are you talking just about the KdF saloon or also the Type 82E with the saloon body on a higher Kubel chassis, they made over 500 of these, and also they made the Kommandeurwagen too, but only about 3 of these ;) I have seen some figures about 560 KdF bodies also being put on the 4 wheel drive Schwimmwagen chassis.

The production of the testing series cars in the pre-production series were widely used as press vehicles. These cannot really be considered as cars delivered under the Sparkarte scheme.

What you have to remember is that the production plant intended to produce the cars was turned mainly to the war effort and produced over 55,000 Kubelwagen cars using the basic engineering of the KdF wagen vehicle with the Porsche developed light military car body. An additional 15,125 Schwimmwagen vehicles were produced as well as aircraft and rocket parts. The KdF Stadt factory was no longer just a car production plant.

Your information about the Opel Projects is interesting and I think I may even start a new thread on this sometime. Hitlers reaction as reported by Hopfinger in his book after the war records the opening of the German Motor Show in 1938 where Hitler made a speech on the up and coming KdF car. He was met by Herr von Opel on the Opel stand and shown their latest model, as technically described above. Apparently he introduced the selling price to Hitler and is quoted as saying this is a real car for the people, a German Volkswagen. Hitler turned his back on Opel and marched away from the stand without a word. If this is true, then I think it gives us some indication of what Hitler thought about the challenge to the car project being brought through by the DAF and KdF organisations. I would love to know if it is reported elsewhere.
I am also interested in your information on export of the KdF wagen being a reported fact. Is this indeed true, or is it a contemporary published rumour? Given the outbreak of war the export market to the UK when production was anticipated to come online in 1941 would have been closed in any case.
Very interesting info.
Regards
Matt Gibbs

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Post by Matt Gibbs » 17 Dec 2006 23:19

Also I forgot to add the german press reported after the outbreak of war that 100000 KdF wagens were to be produced in 1940. We all know now that this was simply propaganda, but is it possible that they thought if the war had gone differently for them with the possible end in 1940 with an invasion of England, that this report may have had some truth behind it initially? We shall never know I suppose!

One truly interesting item I have just realised is that although the reports of a meeting with GM and Hitler took place discussing small cars in May 1934, Hitler had already met with Porsche through Jakob Werlin in the late autumn of 1933 and indeed recieved the Porsche memodandum on the construction of a German Volks Wagen on or about January 17th 1934. Also what intrigues me if Hitler were interested in a car similar to the Kadett why the project was then moved forward based on Porsches report as above, at the end of May 1934 when the Society of German Auto Manufacturers gave the go ahead for the project to start with Porsche at the helm.

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The Opel KDF Wagen

Post by Oracle » 18 Dec 2006 08:07

Your information about the Opel Projects is interesting and I think I may even start a new thread on this sometime.
I must refer you to my series of articles in RESTORED CARS, Australia, called "The Holden Car Project" which sets out the proposed assembly of Opel Olympia Oly.38 cars by HM-Holden's in exchange for Australian wool. The negotiations had been going on since 1936 or so, although in 1935 Holden's had acquired Bosch electric windscreen wipers and I think spark plugs under a complex barter. This would have provided Australia with a unitary construction "Australia's own" years before the eventual Holden 48-215 based on the abortive 1937 Chevrolet Light Car Projects, 195-Y-XX which themselves arose out of the 1938 Opel "1940" prototypes. So you see that Holden in the end had an Opel-based car.

However the research that I undertook over many years has confirmed to my mind the importance of the export market. The fact that the new '40 Model Olympias and Kadetts were to be exported worldwide shows that the importance of earning export currency was paramount, and it does appear that until 1939 the proposed Opel assembly in Australia was still going ahead despite the political situtation, and in fact at least one Opel was built up in 1939 that had ben sent over to act as a "pattern" say. Australian records show that Holden's owed Adam Opel AG money for this car and spare parts, etc., that after war broke out they held onto. Post-war they queried with the Government what to do as GM Corporation were claiming back every cent owed to Opel by overseas distributors. It seems that the New Zealand Government relented inthe case of money owed from GM New Zealand, but the Australians took the attitude that the money was to be paid to the Custodian of Enemy Property, then basically to war reparations funds. Tough!

GM took a very interesting attitude after war broke out as regards Opel exports. There were some to GM Suisse in Biel/Bienne, Danmark, and apparently elsewhere because in August 1940 a shipload were seized by the Royal Navy and auctioned off at the quayside in Southampton. Prior to that, I think in April, a shipload of US Chevrolets bound for GM International in Kobenhaven, and thence for GM Nordiska in Stockholm and the dealer in Norge, were seized by the RN and assembled in Southampton [GM Limited Southampton assembly plant] and then issued to essential users and also the RAOC, etc. with utility cabs/bodies. GM in New York tried to get them released and/or compensation for their value as they were intended for a neutral country, to be sent on to a neutral country. Of course by the time that the official representations had been made Danmark and Norge were under enemy occupation, although the GM plant in Kovenhaven continued for some time. GM exports to GM Suisse petered out in 1940 because of the war disrupting supplies but 502 Opels were assembled in 1940 and 74 in 1941, with 1045 Vauxhalls in 1939! As regards GM Continental production see my page:

http://clubs.hemmings.com/clubsites/che ... agen2.html

My final thoughts this early in the morning are that the Opel Kadett along with Ford's Eifel, whilst not official KDF-wagen, were priced on the domestic market so as to be almost the same price as the Porsche-designed cars. However, they were intended for export and priced, with the subsidy applicable, so as to undercut in that export market. I just cannot imagine that with all the effort expended in getting Opels and to a lesser extent Fords, that the VW was not intended to be exported as was reported. If the UK had been invaded, or a peaceful settlement reached, then as Hitler had agreed to keep its Empire the export market would have been if not flooded, well covered by exported German cars and probably assembled off-shore as in the UK, to enable complex bartering to take place.
. In traditional British automotive export markets the German trade offensive was relentless. For instance an Alexandria, Egypt Ford dealer complained to the British Embassy in Cairo in May 1938 that he was being undercut by the German-subsidised Ford Eifel 10 h.p. car that sold for E£135 as against the British product at E£190 to E£195. This was passed to the Department of Overseas Trade, and thence to Lord Halifax at the F.O. E.W. Flower said, inter alia:

My information is that exports of German cars are subsidized by a 3% levy on the motor agents in Germany. All agents have had their trade discounts reduced by 3%and the pool created by this levy is used to subsidize exports.

In my view this cannot be regarded strictly as a Government subsidy. It exists in a mild form with British manufacturers who quote lower prices for export than for home consumption and the German scheme only takes that policy a step further. After all the export car should not carry the overheads of advertising, road service men, exhibition and sundry expenses inherent in their home sales, so a reduced price is de facto logical.

Flower added that he was informed that an Alexandria Shipping agency had a contract for 1,000 Fords to be sent from Hamburg to Alexandria in ‘Belgian bottoms’, and thus deprived ‘British bottoms of cargo’ It was thought by the Trade Counsellor in Cairo that the Morris and Austin light cars that sold for E£160 approximately might be affected by the competition from the German light car . C.E. House of the D.O.T. wrote to H.A. Denne at Ford in London and asked him for elaboration as previously all Fords sold in Egypt were Dagenham-assembled . It was explained that the Ford Motor Company Limited had no direct control over the German company, whose shares [were also] held in the U.S., and Ford of England were unable to take any steps to prevent this competition, “which they view with dismay”. The Cologne and Dagenham products directly competed in various countries outside the U.K., U.S. and Germany. Given the close relationship between Lord Perry and Henry Ford, the suggestion seems plausible and yet Perry as Chairman of Ford in the U.K. made a speech to shareholders in May and referred to the ‘unfair competition’ of the German car and claimed that it was a case of dumping and further gave the opinion that the British Government take action to protect the British manufacturers . A D.O.T. correspondent later advised that he had seen several Eifels in Germany and although they were the equivalent of the 10 h.p. Dagenham product, they were less well finished. He also added that as Ford in the U.K. and Germany were both controlled by U.S. Ford, Dagenham could have exercised some pressure in Detroit. “It is tolerably clear that G.H.Q. in Detroit have arranged that the German product (indirectly subsidised by the German Govt. {sic.}) should have a free hand in Egypt’ . No reply was made to the German subsidy, and it seems therefore that the British Government from Halifax downwards viewed it as a fait accomplii. There is no evidence yet as to whether Perry’s counterpart in Vauxhall, Charles Bartlett, took the same view about Opels.
Last edited by Oracle on 18 Dec 2006 08:50, edited 1 time in total.

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Post by Oracle » 18 Dec 2006 08:49

I will have tom add more in due course but basically the Southampton Plant was to be an Opel assembly operation for the Empire, and that meant shipping through GM Continental in Anvers/Antwerpen, and then shipping them to Southampton, knocked-down, for assembly and export. Thus this clever rouse was intended to get around exchange control and political problems. So, it would have been: Russelsheim - Antwerpen - Southampton - Melbourne! And - Port Elizabeth, South Africa probably.

I have of course not touched on Opel trucks, and leave that to another time.

The school run is just starting, so a quick few moments! Basicaly, the same subsidy scheme applied to trucks, in the case of Opel from the Brandenburg-am-Havel Plant that opened in 1936 and form the start right-hand drive trucks and bus chassis were available. The British War Department trialled an Opel Blitz 3-tonner in 1938 alongside Bedfords and Fords, and Chevrolets, and offered Opel Blitz chassis for military purposes. By then various 4 x 4 vehicles had been imported by Morris Commercial Cars Ltd in Birmingham for trials. There was evidently no problem about end-user at the time! A sale is a sale! However all Opel imports ceased with the 1938 Models, both cars and trucks, and the real raason was not political backlash but rather a fall in the economy meaning that vehicle sales dropped in the early course of 1939 and there was enough 1938 stock to satisfy demand. Then the Czech crisis put paid to any further imports.


I have just realised that older versions of my files are available online, so here's the index page: http://www.gmhistorian.btinternet.co.uk/ These have however been updated since on my PC!

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Post by Vitesse » 18 Dec 2006 23:15

The Auto Union group were also keen to export to Empire markets. In early 1937 two Auto Union Grand Prix cars, driven by Bernd Rosemeyer and Ernst von Delius, raced in South Africa, already an important export market for AU. In 1939 their DKW motorcycle racing team undertook a tour of Australia, possibly as cover for an espionage mission. They were allegedly tailed by a British motor racing driver called Alan Gascoigne Sinclair, working on behalf of British intelligence.

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