The State of the German Automotive Industry
The German automotive industry, once considered unshakable, is showing serious signs of crisis. Recent data indicates significant pressure on this sector. In the past year alone, the number of employees has shrunk by 7%, profits are decreasing, and excess production capacity is a heavy burden on manufacturers. International competitors, especially in the electric segment, are moving faster and more efficiently.
Job Losses
According to data from the German Federal Statistical Office Destatis, between June 2024 and June 2025, the automotive industry lost approximately 51,500 jobs. This effect extends far beyond the automotive sector: across the country’s entire industrial base, 114,000 positions were cut during the same period.
Compared to pre-pandemic 2019 levels, the number of employees in the automotive industry has decreased by 112,000 people, highlighting the depth of the industry’s decline.
No other industrial sector has recorded such a strong reduction in employment as the automotive industry.
Causes of the Crisis
An EY report points to several factors that caused this situation. Many of the country’s large automakers failed to succeed in the electric race, partly due to excessive regulations and bureaucracy from the federal government. Furthermore, German brands were unable to innovate and develop as quickly as their Chinese competitors and also failed to significantly reduce costs.
Impact of Tariffs
Donald Trump’s trade policy has been a significant factor. Tariffs have begun to hurt local automotive brands, for many of which the US is one of the most important markets. In the first half of 2025, exports of cars and auto parts from Germany to the US decreased by 8.6%.
General Economic Slowdown
The problems of the automotive sector are part of a broader economic slowdown. Germany’s GDP contracted in 2023 and 2024, and data for 2025 does not inspire great optimism. The economy grew by only 0.3% in the first quarter and then contracted by 0.3% in the second, indicating a fragile recovery at best.
This situation indicates the need for structural changes in the German automotive industry, which faces not only internal challenges but also global competition and political decisions affecting international trade. The speed of adaptation to new technologies and market conditions may determine the future of this key sector for the German economy.