The German automotive industry under pressure: strategies for the future of a key sector
With around 770,000 employees, the automotive industry is the backbone of the German economy. However, the industry is facing a turning point that is not only jeopardising its competitiveness, but also its existence as a global market leader. The problems are exacerbated by Trump’s tariff threat of up to 25%. Following the news of Daimler’s drastic drop in profits, other OEMs will follow suit.
⚡️Die Overview of key challenges
- Decline in demand and economic uncertainties:The recovery in demand for new cars is failing to materialise.The ZDK forecasts only 2.7 million new registrations in 2025, a decline of 4.6% compared to 2024. High vehicle prices, hesitant purchasing behaviour and interest rate policy are exacerbating the situation.
- Electromobility: While the share of electrically powered vehicles in Europe is expected to reach 25% in 2025, German manufacturers are struggling with challenges in terms of technology, efficiency and cost structure. Competitors such as Tesla and BYD are setting new standards and threaten to reduce the German market share in the long term.
- China, from growth engine to competitive market: China, once the largest source of sales for the German automotive industry, is increasingly becoming a challenge. Domestic brands are now so strong there that almost three quarters of all cars will be made by Chinese manufacturers by 2030. The sales figures of German manufacturers such as BMW (-30%), Mercedes (-13%) and VW (-15%) are falling significantly as a result.
💡Need for action: Strategies for maintaining competitiveness
- Consistent focus on electromobility Investments in competitive technologies and models are essential in order to remain internationally competitive.
- Market-orientated product portfolios: Greater adaptation to regional preferences, particularly in growth markets such as China, is crucial.
- Efficient production and innovation strategies: Reducing costs without losing innovative strength is the key to being able to compete with Asian manufacturers.
The German automotive industry is faced with the task of maintaining its innovation leadership and at the same time tapping into new markets. This requires not only technological progress, but also strategic foresight and flexibility.