auto exotic The Great East German Used Car Bubble

Once the Berlin Wall fell, demand for VWs and other used western cars surged in East Germany. In the frenzy, some people became very rich and others lost a lot of money.
Head straight that way to the VW dealership!

As the Berlin Wall fell on November 9, 1989, images of columns of East German Trabant cars heading into West Berlin were beamed around the world.

The Trabant, or Trabi, as it is still affectionately called, eventually came to symbolize that historic event. But at the time, most East Germans wanted nothing more than a western car – a Volkswagen, Opel or something else.

The Trabant was the most common vehicle in the GDR and many in communist East Germany waited years to buy one. But reunification threw the country’s car market into total disarray; nobody wanted to keep their tiny, plastic Trabant anymore.

“When reunification came, we knew what we wanted to do was repair and sell western cars,” said Manfred Zellmann, a trained engineer who had a garage for Trabants in the East Berlin neighborhood of Alt-Glienicke. Mr. Zellmann had become a mechanic during the 1980s as his career prospects in the GDR were stymied by the fact he wasn’t a member of the communist party.

“We hardly knew the West Germany auto market and had no idea about market share,” he said, explaining how he had approached Volkswagen. “Then one day, a VW rep showed up at our door and said they wanted to try out doing business with us.”

It was the start of a partnership that today encompasses four car dealerships at several locations employing over 200 people.

Mr. Zellmann's success story is by no means unique. By July 1990, months before East and West Germany officially reunified, Volkswagen had already set up 420 sites across the east to sell VW and Audi cars. Other carmakers were equally busy – in total there were 1,400 western dealerships in mid 1990 in the formerly communist country. East Germany quickly became an El Dorado for dealers.

There was a particularly notorious used car market on a field outside of the eastern city of Dresden.

In the early days, the focus was on used cars. Demand soared: “The market was swept completely clean after the Wall fell,” said Siegfried Trede, head of the DAT used car valuation service.

East Germans en masse wanted to trade their Trabis and Wartburgs for Volkswagens and Opels at any price. Many felt their older vehicles stigmatized them as poor easterners. The market went wild, paving the way for many unscrupulous dealers.

There was a particularly notorious used car market on a field outside of the eastern city of Dresden. Located far away from western Germany, some autos were sold there at double the list price or more. That was extreme, but Mr. Trede said there was no shortage of greed to go around at the time.

“Prices for used cars surged high above the national average due to increased demand. A used vehicle suddenly became worth 10 percent more overnight,” he said.

Many West Germans quickly sold their old cars and bought a new one. And the vast majority of used cars were soon shipped over the border to East Germany.

Back then, the lucky ones were people who managed to find a fair deal. Frank J., for example. He fled to West Germany a few weeks before the Wall fell, going through Hungary and Austria. After finding a job in a Berlin theater, he met Andres Kessler, known today in Germany as the “Auto Pope” for his car radio show. Days after the border was opened, Frank went back across to East Germany to pick up his old Trabant car and drove it back to West Berlin.

Mr. Kessler recalls the moment he saw it: “I thought: What a vehicle!”

The car expert predicted that the value of the East German cars would plunge and recommended that his colleague get rid of the car as quick as he could. Frank J. unloaded it in East Berlin and used the money for a red Audi 80 made in 1974.

“The car was used and had a seriously rusted underbody and was no longer registered,” said Mr. Kessler.

Frank J. drove the Audi drove for another two years before it fell apart, but the two men remain friends to this day. Frank J., however, now drives a minimalist Citroën 2CV.

 

Quelle: dpa
Test the best. Or an Opel.
(Source: dpa)

 

Most East German drivers did not manage to buy a Western car as cheaply as Frank J.  Most of the western cars sold at the time were simply not worth their sticker price and honest dealers like Manfred Zellmann were a rare breed.

“Customers put all their trust in us back then,” said Mr. Zellmann.

Many East German dealers had very little capital and most customers had to pay up front for even used cars. But he was patient and only built up his business slowly. Others didn’t.

“Some people in the business got ahead of themselves in the early years after reunification,” Mr. Zellmann said. Hoping to match the flash of western dealerships, many eastern German firms expanded on credit – and didn’t survive financially.

But what happened to all of those Trabi cars that drove to freedom 25 years ago? Most ended in the junkyard. But even these days, the iconic plastic box car also has many admirers.

“For one in good shape, you’ll have to pay four to five thousand euros. Back then they were worth zilch,” said Mr. Zellmann, who has since retired.

His daughter and son have taken over the family business that he built as the wall fell. But he’s also secured himself two Trabants, which he restored with trainee mechanics.

“You need to remember sometimes where you come from,” he said.

 

This story originally appeared in Der Tagesspiegel. To contact the author: [email protected]