Due to the imposition of import tariffs by President Trump, foreign automakers, particularly German ones, are considering expanding production in the United States. For Audi, this would mean creating new production capacities.
As it turns out, avoiding tariffs is not the only incentive to move production from Germany to the US. Another important factor is the excessively high labor costs, which create a significant burden for the German automotive industry.
New research by the consulting company Oliver Wyman has for the first time demonstrated the huge difference in labor costs between Germany and other countries. It also explains why domestic car production volumes have shrunk by more than a quarter over the last decade and why this trend is likely to continue.
An analysis of 250 automotive plants in various countries showed that Germany is the most expensive country for producing new cars. The average labor cost per car, including wages, pension contributions, and other payments, reaches $3300. Moving production to the US would allow reducing this amount by more than half.
However, even American labor costs ($1340 per car) seem high compared to China, where this figure is only $585. According to the study, in some cases, producing a car in Germany can cost $7800 more than in other countries.
“The question arises of how car production in Germany can even be continued in the future,” stated Fabian Brandt, head of Oliver Wyman in Germany. – “If volumes continue to decline, many medium-sized suppliers will either leave us or cease operations altogether.”
If we ignore the issue of tariffs and focus solely on minimizing labor costs, there are better options for building new plants than China. The study identified several countries with even lower labor costs, including Mexico ($305 per car) and Romania ($273).
The absolute leader in workforce affordability is Morocco, where labor costs per car are only $106 – this is less than one-thirtieth of the German figure.