Germany’s position as a key centre of automotive manufacturing is increasingly under threat as companies shift investment and employment overseas, the country’s main industry body has cautioned.
Hildegard Müller, President of the German Association of the Automotive Industry (VDA), said on Tuesday that the sector faced a “serious crisis” as Germany becomes a less attractive place to do business. Her warning accompanied the release of a new VDA survey highlighting mounting concerns among suppliers and manufacturers.
According to the findings, drawn from 124 small and medium sized companies within the automotive supply chain, 72% intend to scale back investment in Germany. Of these, 28% plan to relocate investment abroad, 25% expect to delay spending, and 19% are preparing to cancel investment entirely. Müller stressed that these decisions were already reflected in employment trends.-sized companies within the automotive supply chain, 72% intend to scale back investment in Germany. Of these, 28% plan to relocate investment abroad, 25% expect to delay spending, and 19% are preparing to cancel investment entirely. Müller stressed that these decisions were already reflected in employment trends.
Nearly two thirds of businesses surveyed reported job losses in Germany during the past year, with 87% blaming competitive disadvantages. At present, 49% of companies are reducing their German workforce, compared with only 7% making cuts at foreign sites.
Suppliers have been struggling with falling demand, stronger international competition, and the costly, complex shift towards electric vehicles and software driven production. Major carmakers including Volkswagen and Mercedes Benz, alongside suppliers such as Bosch, ZF and Aumovio, have unveiled extensive job cuts as they adapt to the changing market.-driven production. Major carmakers including Volkswagen and Mercedes-Benz, alongside suppliers such as Bosch, ZF and Aumovio, have unveiled extensive job cuts as they adapt to the changing market.
Government figures show employment in Germany’s automotive sector has fallen to its lowest level since 2011.
Müller also warned of the broader political ramifications, noting that the far right Alternative für Deutschland (AfD) is increasingly appealing to workers facing insecurity and job losses. The outward flow of investment and employment, she said, threatens the country’s economic strength as well as its social and political cohesion.-right Alternative für Deutschland (AfD) is increasingly appealing to workers facing insecurity and job losses. The outward flow of investment and employment, she said, threatens the country’s economic strength as well as its social and political cohesion.
She criticised the European Union’s (EU) current package of measures designed to support the transition to electric mobility and greener manufacturing, arguing that the proposals fail to meet the needs of Europe’s leading car producing nation. Instead, she urged policymakers to adopt market driven incentives rather than imposing additional regulatory burdens.-producing nation. Instead, she urged policymakers to adopt market-driven incentives rather than imposing additional regulatory burdens.
The VDA’s stance aligns with demands from German car manufacturers who have called for more flexibility in EU targets as the industry navigates the shift to electric vehicles.
Staff Writer
Reporting from the front lines of the automotive industry, delivering expert analysis and the technical updates that drive the South African motor sector forward.
