Business power during (Economic) crisis: Evidence on the role of framing from the German automotive industry

Abstract

What conditions hinder the success of business’s attempts to shape responses to economic crisis? During both the global financial crisis and the COVID-19 pandemic, the German government drafted growth packages. Twice the automotive industry aimed for the inclusion of a vehicle scrappage program, investing considerable effort into ensuring the measure was implemented. Yet, only one of these attempts was successful. To explain this puzzling outcome, I apply business power theory within a comparative process-tracing design, arguing that in contexts of high issue salience, business’s success depends on its ability to control the framing of an issue and win framing contests. I find that this ability was constrained in 2020. The study contributes not only to the literature on business power but also to the broader understanding of who governs in times of crisis, highlighting that taking business and its power into account is crucial to understand crisis response.

Keywords

business power framing salience automotive industry Germany

Introduction

When governments draft measures to tackle economic crises (especially growth packages), particular interests seek the inclusion of measures that benefit them. Often it is the preferences of structurally influential sectors or the wealthy that are represented in crisis responses, but there are also cases of these groups failing to ensure that policy reflects their stances (Culpepper and Reinke, 2014; Degner and Leuffen, 2020; García-Montoya and Manzi, 2023; Schwan et al., 2025). This raises the question of what conditions ensure or hinder the success of business’s attempts at shaping economic crisis responses. To investigate this question, I examine two instances of growth package development in which one prominent economic sector sought the inclusion of the same measure, ultimately only succeeding once.

Both in the aftermath of the global financial crisis and during the COVID-19 pandemic, many governments intervened in their national economies to prevent long-term damage. The German governments at the time—on both occasions a coalition of Christian and Social Democrats—also drafted economic growth packages. Both in 2008/2009 and 2020, there were discussions about a vehicle scrappage scheme, which offers consumers a government-funded discount on a new car if they hand in their old one. The measure, which has already been implemented in countries around the world during economic crises, benefits the automotive industry by stimulating domestic demand for cars (Grigolon et al., 2016). It is therefore unsurprising that the German automotive industry twice called for the implementation of a scrappage program. However, despite similar conditions—crisis, the same coalition in government, and the same national institutions—the automotive industry’s demands were only met once. While the German government introduced a scrappage scheme worth 1.5 billion euros in January 2009, it announced that it would not be using the measure again in June 2020, instead making use of a narrow premium for electric vehicles (EVs). To shed light on the conditions that affected this outcome, I employ business power theory, treating the 2008/2009 case as a typical case of business power application and the 2020 case as a deviant case of the same.

The debate on the scope conditions of the so-called “augmented power mechanism” (Trampusch and Fastenrath, 2021: 247), which links the preferences of business to policy outcomes through the application of business power, concerns the question posed above: What are the conditions under which application of business power is successful? Thus far, the literature has highlighted several possible scope conditions of the mechanism (James and Quaglia, 2017). In instances of high salience, existing theory would expect the mechanism to break down and business to be unsuccessful in its attempts (Culpepper, 2011). However, this does not explain why the 2009 scheme came about, as salience increased immediately before the government’s decision to implement it. Building on this finding, I argue that in high-salience contexts, another scope condition becomes crucial, namely the ability of business to successfully control the framing of an issue in framing contests. With regard to the 2020 case, I find that a strong counter-coalition comprising civil society organizations, environmental associations, and economists constrained this ability. As a result, the mechanism broke down and the automotive industry could not assert its interests. Building on Beach and Pedersen’s (2013) understanding of the method, I conduct two process-tracing case studies of the policymaking processes to test this theory.

I proceed as follows. First, I outline the mechanism tested. Second, I explain both the method and case selection and state my data sources. The empirical section then systematically elaborate on the different parts of the mechanism for the two cases. I conclude by discussing contributions, limitations, and avenues for further research.

The scope conditions of the augmented power mechanism: Framing contests in contexts of high issue salience

Although new conceptions of business power have been added in recent years (Busemeyer and Thelen, 2020; Culpepper and Thelen, 2020), two distinct forms of power remain most commonly applied: structural and instrumental power. The latter materializes in lobby meetings with policymakers, donations to parties, and revolving door tactics and, accordingly, refers to “the various means, unrelated to the core functions of the firm, through which business influences politics” (Culpepper and Reinke, 2014: 429). Structural power, in turn, is built on the position that corporations enjoy within capitalist economies and especially their ability to withhold investment and consequently “damage (…) the economy and thereby (…) the politicians governing it” (Culpepper and Reinke, 2014: 429). While classic notions of structural power viewed it as an automatic, deterministic force (e.g., Lindblom, 1982), recent work within the “empirical turn of business power research” (Babic et al., 2022: 136) sees this power as varying according to the context (Fairfield, 2015: 424), arguing that it can also be applied strategically when exit options are present (Culpepper and Reinke, 2014). Further, some studies (e.g., Bell and Hindmoor, 2014) attribute an ideational element to structural power, stressing “the agency that is involved in shaping the perception of key actors” (Babic et al., 2022: 138).

While structural and instrumental power must be analyzed separately, they are interrelated (Fairfield, 2015: 420). More specifically, structural power potentially increases instrumental power as it strengthens business’s bargaining stance, enhancing its ability to persuade policymakers (Fairfield, 2015: 420). The augmented power mechanism acknowledges this interaction and sees the interplay of structural and instrumental power as central for translating business preferences (X) into policy (Y) (Trampusch and Fastenrath, 2021).

Analyzing the context in which the augmented power mechanism operates, “creates leverage for explaining empirical variation within and across cases” (Babic et al., 2022: 137). Using scope conditions allows for such analysis (Falleti and Lynch, 2009). As Trampusch and Fastenrath (2021) and others (e.g., James and Quaglia, 2017: 5) highlight, the discourse on the scope conditions of the augmented power mechanism is still in its infancy. Thus far, a few conditions have been identified, but they are not all applicable to all cases.¹ I build on the three scope conditions identified by James and Quaglia (2017): institutional access points, preference homogeneity, and salience. First, institutions such as formal arenas of exchange “can provide suitable access points” (James and Quaglia, 2017: 6) for business (also see Hacker and Pierson, 2002; Mahoney, 2007). In line with existing studies, I will concentrate on institutionalized access points through which business engages with policymakers. Second, preference homogeneity within business itself has been identified as critical to the functioning of the mechanism because business cannot effectively assert its interests when it is unclear about its preferences. Accordingly, the means to organize and the legitimacy of disinvestment threats both shrink when a corporate group is not clear about its position (Chalmers, 2020; James and Quaglia, 2017; Truijens and Hanegraaff, 2021). Finally, several studies emphasize the importance of salience for business’s success (Clarke and Macartney, 2025; Culpepper, 2011; Kalyanpur and Newman, 2019). Most prominently, Culpepper (2011) argues that opportunities to provide policymakers with expertise vanish as soon as the salience of an issue increases. I define salience as an issue’s “importance to the average voter, relative to other political issues” (Culpepper, 2011: 4).

I regard these three scope conditions as relevant to the cases. However, I add a new scope condition to the augmented power mechanism: the ability of business to succeed in framing contests. In the latter, different actors compete for control over the framing of an issue. A frame is a narrative accompanying an issue that promotes “a particular problem definition, causal interpretation, moral evaluation and/or treatment recommendation” (Entman, 1993: 52). Controlling such framing enables business to convince other actors of its position and shape policy (Béland, 2009: 708). Particularly successful frames tie a proposed policy to a greater good (Keller, 2018: 1652). Orchestrating the framing of an issue can therefore significantly enhance business power (James and Quaglia, 2025; Kastner, 2018; Keller, 2018; Kemmerling, 2024; Seidl, 2022). Business is not the only actor making use of framing, however. Other actors such as civil society organizations or unions try to leverage framing to limit business power (Ban et al., 2022; Kastner, 2014; Lopez-Uroz, 2026; Seidl, 2022). This can occur through counter-frames that “by unifying diverse groups of actors” (Seidl, 2022: 5) contribute to the formation of broad counter-coalitions. The latter can impact public opinion and consequently lead to policymakers not adopting a measure and its framing. Thus, success in a framing contest does not solely depend on the chosen frame, but also on other actors that might form counter-coalitions to delegitimize this framing.

This framing contest scope condition interacts with salience. Succeeding in framing contests is only relevant in contexts of high salience. When salience is low, business does not need to manage public discourse. In these contexts, business can instead rely on its role as provider of expertise, where it is less likely to encounter actors questioning its chosen frame (Culpepper, 2011). When salience is high, however, business’s success hinges on achieving primacy in framing contests. I am not the first to point to the interrelation of salience and framing. Studies from the noisy politics literature highlight the ability of business to strategically manipulate the salience of an issue and subsequently use framing to impact policymaking (James and Quaglia, 2025; Keller, 2018; Kemmerling, 2024). In crisis contexts, however, such strategic manipulation of salience is not feasible, as the public will monitor the policymaking process more closely. Consequently, when seeking the implementation of a measure supporting its particular interests, business is likely to face high issue salience and must compete in framing contests regardless.

To summarize, I argue that the impact of salience for the functioning of the augmented power mechanism depends on framing. When salience is low, framing is of no importance. However, when salience increases, the success hinges on business’s ability to dominate framing contests. When business’s ability to shape the framing of an issue is restricted by a strong counter-coalition, the mechanism breaks down. Figure 1 sums up this argument. Regarding my cases, I hypothesize that the cause (the industry’s preference for a scrappage scheme) and the mechanism conditions (business power application; state sponsorship) were present on both occasions. However, in 2009, the outcome (introduction of a scrappage scheme) was achieved, while in 2020, it was not. I expect the framing contest scope condition to be responsible for this failure.

Figure 1.

Augmented power mechanism and its scope conditions based on Trampusch & Fastenrath (2021), James & Quaglia (2017), and own argument.

Research design

I apply theory-testing process-tracing as defined by Beach and Pedersen (2013). In so doing, I adopt a deterministic, mechanismic causal ontology (Beach and Pedersen, 2013: 28). By testing my mechanism with both a typical and a deviant case, I follow recent methodological contributions that emphasize the potential of such designs (Beach and Pedersen, 2018; see Trampusch and Fastenrath, 2021 for a similar design). In line with Gerring (2007), I treat the 2009 introduction of a vehicle scrappage scheme as a typical and the 2020 non-introduction as a deviant case of business power application. The external validity of my findings is enhanced by both of my cases being situated in very similar political and economic contexts: in both instances, the decisions on the growth packages were made by a Merkel-led grand coalition government during periods of economic downturn and with federal elections imminent (in September 2009 and 2021). I examine both cases from the moment the initial policy was proposed by automotive industry officials (October 2008 and April 2020) until the government’s decision to implement the policy, or not (January 2009 and June 2020).²

Data for my case studies are taken from various sources including newspaper articles, legislative texts, press releases and press conferences, parliamentary speeches, quantitative figures, and six semi-structured interviews with central actors in the policymaking process and experts (automotive industry officials, NGO representatives, industry experts, policymakers). Accordingly, I triangulate a range of data types. Information on the interviewees and the format of the interviews can be found in Table 1.³ I assigned codes to the interviewees to ensure their anonymity. Interviewees were selected purposively and chosen with two aims in mind. First, when choosing experts, I aimed at broad coverage of different perspectives (IV1–IV3). Second, some interviewees were chosen because of their involvement in the two policy processes (IV4–IV6). While IV4 was selected due to their involvement in the 2009 process, IV5 and IV6 were primarily involved in the 2020 case. To increase validity, I triangulate information obtained from the interviews with additional data sources.

Table 1.

List of interviews.

Interviewee code	Interviewee type	Date
IV1	Expert (economic perspective)	December 2022
IV2	Expert (union perspective)	December 2022
IV3	Expert (environmental perspective)	December 2022
IV4	High-level automotive industry lobbying official	January 2023
IV5	Civil society NGO representative	March 2023
IV6	High-level policymaker for a government party	July 2024

Case analysis I: The introduction of the 2009 vehicle scrappage scheme as a response to the global financial crisis

I first address the typical case, the 2009 introduction of a vehicle scrappage program in the wake of the global financial crisis, starting with the cause and outcome.

X and Y: The preference of the automotive industry and the scrappage scheme

In response to the imminent threat of recession during the global financial crisis, the German government drafted two economic growth packages in November 2008 and January 2009 (Klenk and Nullmeier, 2010: 280f.). Throughout this dynamic process of measure development, the demands of the automotive industry—which faced a substantial reduction in demand—were articulated with particular force (Tagesschau, 2009). Especially persistent were the automobile industry’s calls for some form of scrappage program. This campaign was led by the German Association of the Automotive Industry (VDA), which aims to unify the voices of the industry’s different sectors, thereby pushing through its common interests. As early as October 2008, when the government had no plans for broad economic measures, then VDA president Matthias Wissmann already proposed a general scrappage scheme to “strengthen successful real industries” and overcome the low demand for cars (German Association of the Automotive Industry, 2008a). As the industry crisis intensified in the subsequent months, calls for a scrappage program were reiterated, with the argument that such a program would facilitate the industry’s recovery (e.g., German Association of the Automotive Industry, 2008b).

After some smaller wins in the November 2008 stimulus package—such as a temporary suspension of the vehicle tax that was being reformed at the time⁴—the major success came with the announcement of the second growth package in January 2009. The new set of measures included a scrappage program initially worth 1.5 billion euros but 3 months later increased to 5 billion euros. From January 27, 2009 onward, car-owners were offered a 2500 euro discount for replacing a used car that was a minimum of 9 years old with a new vehicle that met at least the EURO 4 emission standard (Bundesgesetzblatt, 2009: 421). With these requirements, the government came very close to meeting the industry’s demands for a discount of 3000 euros for a scrapped car older than 10 years with no constraints on the new car (Kade, 2018). Also, compared to similar programs in other countries, the measure was generous, featuring almost no restrictions on the vehicle purchased, a low minimum age for the scrapped car, and a high premium (Grigolon et al., 2016). It is therefore unsurprising that the industry welcomed the new measures enthusiastically, with VDA head Matthias Wissmann describing them as “the right signal at the right time” and praising the government for demonstrating “its ability to act in a goal-oriented manner” (German Association of the Automotive Industry, 2009b).

Thus, both the X (the industry’s preference for such a scheme) and the Y (the introduction of the program) were present.

Mechanism: Structural and instrumental business power

How did the industry’s preference translate into policy? I begin by examining the structural power of the automotive industry at the time of the policymaking process, looking specifically at how it applied this power.

As the key industry in the German economy, the automotive sector has tremendous structural power. In 2008, it played a major role in the export-led growth-oriented model of capitalism (Baccaro and Höpner, 2022) by contributing 17.69% of total exports (own calculations based on Autohaus Online, 2008a; Federal Statistical Office of Germany, 2022), directly employing over 750,000 people (German Association of the Automotive Industry, 2009a), and accounting for over 11% of GDP (own calculations based on Federal Statistical Office of Germany, 2024; German Association of the Automotive Industry, 2009a). Further, the industry was directly linked to the German government, with the state of Lower Saxony holding a 14.7% stake in Volkswagen, the country’s biggest car manufacturer (Volkswagen AG, 2009). These figures paint a clear picture, vividly illustrated by a quote from an expert interviewed for this study: “It [the industry] is the most important industry in Germany. This cannot be understated” (IV3).

The structural power derived from the industry’s prominent position in the economy operates through both indirect and direct channels. It works indirectly by policymakers anticipating the consequences of their actions for the industry and thus for the economy as a whole (Lindblom, 1982). This becomes apparent in the way government officials emphasize the industry’s relevance for the economy. Justifying the scrappage measure in a Bundestag debate in early 2009, Chancellor Angela Merkel, for instance, highlighted that the industry was “not just any industry” while praising its “unique technology and innovation cluster” as an inherent part of “to the core substance of […] Germany” (German Bundestag, 2009: 21427). Further, the automotive industry strategically applies its structural power, for instance, in press releases. In the VDA’s annual press release for 2008, for example, Wissmann states that the crisis will have an “impact on employment” going on to stress the responsibility of all relevant actors, including “politics, banks, industry,” in tackling the crisis (German Association of the Automotive Industry, 2008b). Of course, press releases and the politicians’ public comments about the industry are in no way a direct reflection of how the industry argues in negotiations with policymakers and how the latter view the industry’s structural position. However, if these views are articulated publicly, it is likely that similar rationales are present in decision-making processes behind the scenes. An industry expert confirms this notion: “The automotive industry is very much heard when it comes to setting up new programs, because a large number of jobs in Germany depend on it” (IV1).

Although their foundations differ, structural and instrumental power are closely intertwined. This is reflected, for example, in structural arguments made during lobbying meetings. Thus, I now turn to the application of instrumental power. All indicators of instrumental power suggest that the industry applied this power throughout the policymaking process. The automotive sector and its representatives have close personal ties to politics (Meckling and Nahm, 2018: 11), it made significant donations to government parties, and industry representatives presented their demands at several formal and informal meetings with policymakers (IV4).⁵ Hence, “[t]he automotive industry is the king of lobbyists” (IV1). These lobbying efforts were directed primarily at the Christian Democrats (CDU), who tended to oppose the measure for fiscal reasons (IV4). In contrast, the Social Democrats (SPD) viewed the proposed measure positively from the beginning (IV4; Kade, 2018). In light of the outcome, attempts to persuade the CDU were clearly successful. Consequently, the preferences of the German automobile industry were transformed into policy through strong application of structural and instrumental business power.

Scope conditions I: Preference homogeneity and institutional access points

Just as crucial as the parts of the mechanism itself is the context in which that mechanism operates. I begin with the scope conditions of preference homogeneity and institutional access points.

As the price of cheaper cars is, proportionally speaking, reduced more by a scrappage bonus, not all carmakers profit equally from the measure (Der Spiegel, 2009a; IV4). Carmakers from the premium segment (e.g., Daimler or BMW), in particular, benefit less and, accordingly, are more likely to oppose initiatives pushing for the adoption of such a scheme. It was thus not a foregone conclusion that the industry ultimately spoke with a unified voice. The VDA took up the task of unifying interests, arguing that disruption of the supplier industries would also threaten the future economic well-being of the premium manufacturers (IV4). It successfully convinced the premium manufacturers, paving the way for the measure to be introduced. Further evidence on the homogenization of preference can be found in the car dealership domain. While their association initially expressed doubts about the measure, by November 2018, it had adopted a positive attitude (Autohaus Online, 2008b).

Moreover, there is no indication of the industry’s access to policymakers being restricted in 2008 and 2009. This access was provided through both a series of informal meetings between industry representatives and policymakers (see Table A2, Supplementary Material) and through more institutionalized settings. In November, for instance, only a few days after the first growth package was announced, two car summits were held simultaneously: one organized by Chancellor Merkel and one by Minister of Foreign Affairs Frank-Walter Steinmeier, who at the time had just been announced as the SPD’s candidate for chancellor in the 2009 federal election (Volkery, 2008). In December, Chancellor Merkel then once again invited industry representatives to voice their demands in what was dubbed the “economic dialogue” (Konjunkturgespräch), which aimed to arrive “at a joint assessment of the situation and prospects for 2009” (Käfer, 2008). Thus, industry’s access to policymakers has not been restricted at any point. Now, I turn to the final two scope conditions: The salience of the issue and the ability of business to freely frame it.

Scope conditions II: Salience and framing contest

Whether an issue is perceived to be of relevance by the public and thus discussed in the media and society has an impact on the success of business’s attempts to push through their interests and the strategies they use to do so.

Figure 2 depicts the number of German newspaper articles published on the issue from the initial proposal of the scrappage measure in October to the day before the growth package was officially announced in January.⁶ The salience of the issue increased twice during the negotiation of the two growth packages (early November 2008 and early January 2009). This increase was particularly marked before the final announcement of the measure on January 12, 2009. Several developments within the policymaking process explain this surge. After announcing their plan to develop a second stimulus package worth 50 billion euros on January 5, both governing parties retreated into working groups to discuss potential measures and meet with business representatives (Kessler, 2009). Consequently, the media reported on the negotiations as well as potential measures such as the proposed scrappage scheme. Whether the government would introduce the measure remained unclear at the time, as the CDU was still only in favor of a vehicle tax reform. The coalition committee did not make the final decision until January 12 (Wittrock, 2009). As a result, especially during this crunch period of the negotiations, there was a strong focus on the measure. So how was the automobile industry still successful, contrary to what theories on the role of salience in weakening business power would suggest (Culpepper, 2011)?

Figure 2.

Salience of a potential scrappage program throughout 2008/2009. Source: LexisNexis. Search terms: “Umweltprämie” OR “Abwrackprämie” OR “Verschrottungsprämie”.

I contend that the success of business power here was due to the automotive industry being able to freely frame the measure as serving society as a whole—based on the argument that it helps to tackle climate change and save jobs. As highlighted above, the VDA never became tired of emphasizing the potential macroeconomic consequences a crisis of the automobile industry might have, especially for employment (German Association of the Automotive Industry, 2008a; 2008b). Moreover, the VDA combined this economic framing with an ecological argument that stressed the alleged environmental benefits of the measure.⁷ This point was made especially clear shortly after the measure was officially announced with Wissmann praising the combination of vehicle tax reform and scrappage scheme as “part of a smart climate protection policy,” arguing that it helps to achieve “climate and environmental protection goals” (German Association of the Automotive Industry, 2009b).

Not only did policymakers adopt the term “environmental premium” (Umweltprämie), initially proposed by Wissmann in October 2008 (Bundesgesetzblatt, 2009; German Association of the Automotive Industry, 2008a) but also the twofold narrative accompanying it. Vice-Chancellor Steinmeier, for example, argued that the proposed measures, with the scrappage program at the top, would support the country’s “ecological renewal” (German Bundestag, 2009: 21433f.). In the same debate, SPD politician Andrea Nahles also borrowed the employment argument, contending that “the scrappage premium makes a contribution to the preservation of jobs” (German Bundestag, 2009: 21450). The automotive industry’s framing of the measure as helping to avoid job cuts served precisely this narrative.⁸

Policymakers also used this framing although the measure itself did not include any limitation on the CO₂ emissions of the new car being purchased and it remained unclear whether it would help tackle impending unemployment. The automotive industry could achieve this success because there was no counter-coalition calling its framing into question. A proxy measure I constructed provides evidence of this absence of critique. Aiming to capture the number of newspaper articles addressing criticism of the measure, the proxy counts the number of German-speaking articles in the LexisNexis database that mention the three keywords “Kritik,” “Prämie,” and “Auto.”⁹ Overall, the indicator only found five articles throughout the observation period. Although it does not allow for conclusions about the exact volume of critique present in the media, a comparison with the 2020 case (112 articles found) indicates significantly less criticism of the measure in the media during the negotiation phase. Accordingly, the spike of salience throughout the process results not from extensive questioning of the industry’s framing, but from more neutral reports enumerating the potential measures debated during the governing parties’ negotiations on the growth package. In fact, public critique on the measure did not increase until after the measure had been announced (e.g., Grabowsky, 2009; Welt, 2009). Hence, owing to the absence of a counter-framing coalition, the automotive industry could freely frame the measure, meaning it could successfully apply business power.

Case analysis II: The non-introduction of the 2020 vehicle scrappage scheme during the COVID-19 pandemic

While this mechanism operated successfully in 2009, it broke down in 2020. Again, I start with both cause and outcome.

X and Y: The preference of the automotive industry and the non-introduction of the program

After the World Health Organization (WHO) declared the coronavirus outbreak a pandemic in March 2020, governments around the world implemented various far-reaching measures to contain the virus. The German government was no exception, leading to a near-total halt in economic activity across virtually all sectors. As a result, in the second quarter of 2020, German GDP contracted by 10.5%, a decrease even more drastic than in 2008 or 2009 (Federal Statistical Office of Germany, 2023). In comparison with the 2009 recession, however, this crisis was broader in scope. It was not just the financial markets and specific sectors of the economy, but society as a whole that stood on the brink (IV2; IV3). Although its cause was not economic, COVID-19 was, however, also an economic crisis. To avert a massive economic downturn and stabilize the economy, the German government at the time—once again a CDU–SPD coalition with Merkel as chancellor—acted swiftly. After initial emergency measures in March and April, it announced a huge economic growth package worth 130 billion euros in early June (Groll et al., 2020).

Again, a prominent voice in the process of developing measures for the stimulus package was the automotive industry. Like other sectors, it was confronted with the ramifications of the pandemic and the actions taken to contain it. April saw a monumental slump in incoming orders (−70% compared to the same month in the previous year) and export transactions (−94%) (German Association of the Automotive Industry, 2020a) and recovery after the initial steps to restart production in May was sluggish (German Association of the Automotive Industry, 2020c). Thus, the short-term crisis the sector experienced proved to be severe.¹⁰ The industry did not hesitate to call for help, however, and in the lead-up to the growth package, several potential instruments were debated. While the industry publicly primarily advocated measures such as a reduction of corporate taxes or an increase in public investment, it quietly favored one particular measure: a broad demand stimulus for cars (IV1; IV3; IV5; IV6; Stuttgarter Nachrichten, 2020a). What was crucial here was not the scrappage aspect, but whether the premium would also be paid for combustion engine cars. Since 2016, the German government has subsidized sales of EVs by contributing a certain amount to each purchase (Federal Ministry for Economic Affairs and Energy, 2016). Thus, some kind of vehicle premium was already in place when the COVID-19 pandemic began.¹¹ However, as EVs still constituted a small minority of car sales—in 2019, only 3% of sales were electric and hybrid vehicles (Agora Verkehrswende, 2023)—the industry pressed for a premium that also included combustion engines (IV1; IV6; Poschardt, 2020). The efforts of the industry were thus clearly focused on achieving a premium open to different engine technologies and with minimal conditions.

Although the stimulus package announced by the Merkel government in early June included several indirect (temporary reduction in sales tax) and direct (subsidies for research and development, investments in public fleet renewal and charging infrastructure) measures targeting the automobile sector, it did not feature a bonus for combustion engine vehicles. Instead, the existing premium for EVs and hybrid cars was doubled (Fuchs and Sack, 2022: 612). Hence, the industry’s most pressing demand—a quasi-unconditional premium—was not met, resulting in huge disappointment among the carmakers (IV1; IV6; Gathmann, 2020).¹²

Thus, while the automotive industry clearly sought a broad, unconditional vehicle premium (often referred to as a scrappage scheme, although the scrappage aspect was subject to minimal debate) to revive the automobile market, this preference (X) did not translate into policy (Y). Instead, the grand coalition government offered a specific and targeted premium for EVs and hybrid cars that only related to a tiny segment of the market. But why did the augmented power mechanism not work?

Mechanism conditions: Structural and instrumental business power, and state sponsorship

Despite not achieving the desired outcome, the industry did everything to assert its interests. In so doing, it relied on its pivotal role in the German economy: in 2019, it employed over 823,000 people (German Association of the Automotive Industry, 2020b: 51) and contributed 12.53% of GDP (own calculations based on Federal Statistical Office of Germany, 2024; German Association of the Automotive Industry, 2020b). Consequently, the German automobile industry continued to enjoy a structurally advantageous position within the economy. Again, the industry leveraged this position, particularly through the media, by calling for a “rapid and effective demand stimulus in the automotive market to avert a massive loss of jobs” (Stuttgarter Nachrichten, 2020b). Policymakers saw the industry as requiring particular attention and this is reflected in how they spoke about it. Referring to the goals of the working group for economic stimulus measures, comprising several ministries and the heads of the VDA and IG Metall, economic affairs minister Peter Altmaier stressed the aim “to quickly get the particularly affected automotive industry and other sectors of the economy back on track” (Federal Ministry for Economic Affairs and Climate Action, 2020a), later highlighting the jobs the automotive industry provides. Similar points were raised by Chancellor Merkel in a press release on an earlier car summit (Press and Information Office of the Federal Government, 2020). Leading policymakers thus justified the industry receiving special treatment by referring to its significance for the economy.

This structural power also directly influences the German automotive industry’s access to policymakers. Being able to draw on close personal ties and access policymakers through various informal meetings, the industry remained in “very close dialogue” (Minister for Economic Affairs Peter Altmaier; Federal Ministry for Economic Affairs and Climate Action, 2020c) with politics.¹³ Hence, the industry did indeed exhibit and apply a high degree of both structural and instrumental power in the policymaking process leading up to the COVID-19 growth package. The success of these efforts becomes clear when we look at who defended the industry’s proposals.

While in 2009, the CDU opposed the measure, in 2020, it advocated a scheme that also supported combustion engine vehicles (IV2; IV4; IV6). Parts of the SPD, however, were more skeptical about including them (IV2; IV4; IV6).¹⁴ Additional support for the idea came from the minister-presidents of the three “Autoländer” Lower Saxony, Baden-Wuerttemberg, and Bavaria, each of which hosts one of the three major car manufacturers (Die Tageszeitung, 2020), meaning that the industry had several influential politicians promoting its position. Yet, as shown above, it was still unable to achieve its goal—though it did come close, as indicated by a proposed resolution submitted by the economics ministry to the coalition committee in early June that still proposes a scheme also promoting combustion engine cars (Federal Ministry for Economic Affairs and Climate Action, 2020b; IV6). Thus, a broader premium had been on the table until the final negotiations in the coalition committee. Why then was the automotive industry still unsuccessful?

Scope conditions I: Preference homogeneity and institutional access points

Divergent preferences and restricted institutional access cannot explain the outcome. Although the VDA did not publicly present a specific proposal for the measure—with some media articles interpreting this silence as a sign of internal disunity (Lamparter, 2020)—interview evidence suggests that the industry’s demand for a broad premium was widely shared (IV1; IV3; IV5; IV6). For instance, one high-level policymaker stated: “The premium for combustion engine cars was a concern for the entire automotive industry, including car manufacturers, suppliers, dealerships, and unions” (IV6). Thus, the industry’s emphasis was on the need for a potential premium to include cars with combustion engines—and on this there was no evidence of internal disunity.

Further, rather than being restricted, access to policymakers appears to have been even more institutionalized than in 2008/2009.¹⁵ This was illustrated by IV6, who emphasized that car summits strengthened access both before and during the pandemic:

Throughout Angela Merkel’s chancellorship, we had a car summit almost every year, always with the participation of the entire industry, including unions, because it was an important economic sector. Such summits, all of which were announced publicly, also took place in other policy areas, including during the refugee crisis. Starting in 2019, several car summits were held because it was already foreseeable that many manufacturers and suppliers would come under pressure, partly due to technological transformation and the changed global competitive environment. (IV6)

Among these institutionalized formal arenas during the early days of the pandemic was a car summit (May 5) with several ministries (Chancellery, Finance, Economics, Transportation) and the working group for economic stimulus measures (also see above) (Press and Information Office of the Federal Government, 2020). Members of the working group met with various ministers (Chancellery, Finance, Economics, Transportation, Environment) on two separate occasions (May 14 and 26) to discuss measures for their sector. As in 2008/2009, at least 35 more informal meetings took place between March 1 and the announcement of the growth package on June 2, providing the industry with further access to ministry representatives (see Supplemental Material A2 for details). Thus, unlike any other sector, the industry was granted institutionalized access to policymakers to voice its demands.

Scope conditions II: Salience and framing contest

Figure 3 depicts the number of German newspaper articles published on the scrappage scheme throughout the period under study. Unlike in 2008/2009, salience rose rapidly when the industry began to advocate for a scrappage program in April. It then continued to grow throughout April and peaked at the time of the car summit in early May due to NGO campaigns (e.g., Sawatzki, 2020). Subsequently, while the working group for economic stimulus measures met, salience declined but remained on a high level until the final decision by the coalition committee. The decision was thus made under intense public scrutiny.¹⁶

Figure 3.

Salience of a potential scrappage program throughout 2020. Source: LexisNexis. Search terms: “Abwrackprämie” AND “Auto”.

Thus, the conditions under which the automotive industry sought to assert its interests were similar to 2009. However, this time it failed to leverage framing in order to overcome the disadvantages of the salient setting, though it did attempt to do so. The VDA proposed framing the measure as a “restart premium” (Neustartprämie) which not only supports workers in returning from short-time to regular work but also reduces emissions by replacing old combustion engines with more efficient new ones (dpa-AFX, 2020). Emphasizing a similar reasoning, the three major carmakers in coalition with Bavaria’s minister-president Markus Söder proposed the term “innovation premium” (Innovationsprämie) (Eichinger et al., 2020). As in 2009, the industry thus attempted a twofold framing combining economic with ecological arguments but concentrating on the former.

Unlike 2008/2009, attention on and criticism of the measure increased early on (with salience already peaking in early May 2020). Critique broadly came from three directions. First, civil society groups questioned the automotive industry’s priority access to politics. To do so, they leveraged the “Dieselgate” scandal that exposed VW’s use of software to reduce its engines’ pollution in test environments (IV1; IV2; IV3; IV4; IV5; Jackson, 2024b). LobbyControl, for instance, collected over 35,000 signatures against the “preferential treatment” of the industry which had “devastating consequences for the common good in the past – keyword: Diesel scandal” (LobbyControl, 2020). Second, environmental NGOs capitalized on the increased awareness of climate change at the time, arguing that including combustion engine vehicles in the premium would undermine climate goals (IV2; IV3; IV4; IV5; IV6). Throughout May, they organized small-scale demonstrations against the proposed scheme (e.g., Krüger, 2020). The arguments of environmental associations particularly impacted the SPD. While the CDU could initially rely on the support of the SPD government representatives, this shifted, as evidenced by the following quote from a policymaker: “While working on the economic growth package, the SPD changed its view under pressure from environmental associations” (IV6). IV2 suggested this shift was driven by electoral concerns, as the SPD feared losing votes to the Greens in the 2021 federal election. Third, prominent economists publicly advised against a scrappage bonus, sometimes referencing the 2009 scheme (IV1; IV5). The German Council of Economic Experts criticized “industry-specific measures, such as a vehicle scrappage scheme, which tend to reinforce existing structures without having a significant impact on the economy” (Feld et al., 2020). The 2009 experience thus had consequences for the 2020 outcome.¹⁷ Asked about the role of civil society in the outcome, an NGO representative summarized the above as follows:

“At that moment, everything came together: the environmental associations’ environmental policy demand—not to include combustion engines—our lobbying argument—it is unacceptable for politics to join forces with the automotive industry alone—and then, on top of that, a completely different scientific angle—that it also makes no economic sense. All of this was so convincing that it made its way into the media discourse and ultimately into politics.” (IV5)

The number of critical voices represented in media articles suggests that the arguments of this counter-coalition impacted media discourse. During the policy process, my proxy measure identified 112 articles addressing criticism of the measure (compared to 5 in 2008/2009).¹⁸ These arguments also affected public opinion, which, as documented by several representative surveys at the time, was more critical of the industry’s needs (Frankfurter Allgemeine Zeitung, 2020; Möthe, 2020).

These arguments made their way into politics, as reflected in how policymakers framed the measure. At a press conference announcing the growth package, Vice-Chancellor Olaf Scholz stated “that focusing on a single industry is not the right approach” and emphasized that the program aimed to facilitate “technological change in the automotive industry and the electrification of vehicles” (Wir wollen mit Wumms aus Der Krise kommen, 2020). Thus, Scholz adopted both the ecological (support of EVs) and anti-preferential treatment arguments of the counter-coalition. Further evidence for the automotive industry losing the framing contest stems from the official name of the measure. In calling it an “innovation premium” (Innovationsprämie), the German government adopted the term initially proposed by Söder and the manufacturers. However, the name now implied a narrower understanding of “innovation.” For Söder and the carmakers, innovation was tied to modern combustion engines and their alleged ecological benefit (Eichinger et al., 2020). For the government parties, however, innovation in the automotive industry concerned the green transition toward EVs. Again, this is illustrated by statements from the press conference on the growth package. Chancellor Merkel stressed that the measures forming the “program for the future” (Zukunftspaket) supported innovation in the green and digital transformation and targeted “modern mobility, particularly the promotion of electric vehicles” (Einen guten Grundstein gelegt, 2020). Thus, evidence points to the counter-coalition of civil society organizations, environmental groups, and economists succeeding in the framing contest. Consequently, the application of business power by the automotive industry failed.

Conclusion

This study shows that business power theory can explain why the German government introduced a vehicle scrappage scheme in the context of the financial crisis and not during the COVID-19 pandemic. By refining the augmented power mechanism, I argue that in contexts of high issue salience, the success of business power hinges on business’s ability to control the framing of an issue in framing contests. If a counter-coalition successfully questions the framing, business loses the contest and its power collapses. In 2009, the industry could tackle the high salience context by freely framing the measure as an “environmental bonus” with both ecological and economic benefits. At the time, no counter-coalition had formed to question this framing. In 2020, this situation changed: a strong counter-coalition—comprising civil society organizations, environmental NGOs, and economists—successfully challenged the industry’s framing. As a result, despite its attempts, the industry could not offset the disadvantages of the high salience context through framing, and the application of business power failed.

The study contributes to four fields of research. First, it underscores that taking the power of business into account is crucial in understanding political responses to crises. Especially when drafting economic growth packages, powerful industries will seek to introduce measures that benefit them (IV6). The cases show, however, that such attempts are not automatically successful and context matters. Second, theoretically the paper advances the literature on the contextual conditions of the augmented power mechanism by proposing a new scope condition that interacts with salience: the ability of business to freely frame an issue in framing contests. Future research should incorporate and test this condition. On a broader level, this study also showcases how to integrate constructivist and materialist explanations. Third, the study contributes to debates on green industrial transformations by demonstrating how vested interests leverage their power to enforce policies that slow the green transition. It shows how effective counter-coalitions comprising actors such as NGOs or experts may undermine these vested interests’ efforts. It specifically points to the automotive industry’s vast power as one factor hindering the EV transition (for other factors, see for instance Jackson, 2024a). The study highlights how the German automotive industry attempted to use this power to enforce a policy that supported its old business model, which relied on high-quality combustion engine cars. Lastly, the study contributes to an array of existing work documenting the privileges enjoyed by the automotive industry in policymaking processes (e.g., Jackson, 2024b; Meckling and Nahm, 2018; Richter and Haas, 2020; Richter and Smith Stegen, 2022).

As all scholarly work, my study has certain limitations. First, theory-testing process tracing cannot rule out explanations that lie outside the mechanism (Beach and Pedersen, 2013: 15). During the interviews, some alternative explanations did emerge. These include the role of labor and unions, strategic party politics and particularly the SPD’s fear of losing votes to the Greens in 2020, as well as differences in the severity of the crises. Further, the policy process was longer in 2009, perhaps allowing the industry to better lobby for the measure.¹⁹ Although I am confident that my findings are robust, approaching the cases from a different perspective might further validate my argument. Second, since the 2009 experience partially affected the framing scope condition, my findings are subject to endogeneity. Thus, my two cases are not entirely independent. However, because the study is qualitative, this endogeneity is easier to address.

Supplemental material

Supplemental Material—Business power during (Economic) crisis: Evidence on the role of framing from the German automotive industry

Supplemental Material for Business power during (Economic) crisis: Evidence on the role of framing from the German automotive industry by Jonas L. Horn in Competition & Change

Footnotes

Acknowledgments

I would like to thank Michael Schwan, Christine Trampusch, Robin Hetzel, Michael Kemmerling, Friedrich Haas, all members of the Comparative Political Economy Research Group at the Cologne Center for Comparative Politics, and two anonymous reviewers for insightful comments on earlier versions of this paper. I am grateful for comments received on an earlier draft of the paper from participants of the 2024 Convention of the German Political Science Association, University of Göttingen. I thank Carla Hammes-Welch for language editing the paper. Finally, I would like to express my gratitude to my interviewees, without whom this study would not have been possible.

ORCID iD

Jonas L. Horn

Ethical considerations

Not applicable (only elite interviews conducted).

Consent to participate

IV1-IV6: Verbal consent.

Consent for publication

IV1-IV6: Written consent.

Funding

The authors received no financial support for the research, authorship, and/or publication of this article.

Declaration of conflicting interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Data Availability Statement

Data is being made as transparent as possible through supplementary material.*

Supplemental material

Supplemental material for this article is available online.

Notes

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