The situation facing the German automotive industry is expected to worsen, according to the assessment of the German Association of the Automotive Industry (VDA). A survey conducted by the association among suppliers and other medium-sized manufacturers found that around two-thirds (64%) of companies reduced employment at their German sites last year. Investment plans in Germany are also “still weak,” said VDA chief economist Manuel Kallweit on Tuesday in Berlin.
According to Kallweit, 72% of the companies surveyed reported “that they are postponing, relocating, or completely cancelling investments originally planned for Germany.” At the VDA’s annual press conference, he noted that the picture is very different in other regions: “Only 3% of our companies want to reduce their activities in the United States, and only 5% want to do so in China.” By contrast, one in three companies surveyed plans to scale back its involvement within the EU.
The VDA further stated that around half of all companies (49%) are currently cutting jobs in Germany. Only 5% of surveyed firms intend to increase employment in Germany, while 46% expect staffing levels to remain unchanged.
According to the association, this development is primarily driven by competitive disadvantages that make Germany an unattractive location. There is a “massive location crisis,” said VDA President Hildegard Müller. This puts companies, and especially medium-sized automotive firms, under significant pressure.
Müller listed several reasons why investments are increasingly being made outside Germany: “bureaucracy, energy prices, tax burdens, slow processes, lack of digitalization, and unfortunately still a dilapidated infrastructure.” These, she said, are “not factors that invite investment here.”
“Everything that creates growth must have the highest priority in Brussels and Berlin,” Müller demanded. The guiding principle must be: “Away from obligations and penalties and toward market-based incentives.” She warned that any attempt to isolate the German location could become a “boomerang” given internationally interconnected supply chains. Such a move, she said, would harm the interests of Germany’s export-oriented automotive industry and its workforce.
For the survey, the association questioned 124 companies from the supplier industry as well as medium-sized manufacturers of trailers, bodies, and buses in January.
From breaking news to thought-provoking opinion pieces, our newsletter keeps you informed & engaged.
