The automotive industry in 2024

However, unlike its competitors in Western Europe, the automotive industry in Germany was able to benefit from this. Between 2000 and 2017, production in Germany grew significantly. The basis for this was the German automotive industry's special business model. This was based on two pillars. Firstly, the active globalization of production and sales and secondly, the dominance in the premium segment. This strategy made it possible to produce high-priced vehicles for the world market in Germany - a good 75 percent of the cars built in Germany are exported, of which around 40 percent are exported intercontinentally.

However, this successful business model has begun to falter, leading to significant production losses from 2018 onwards. In 2023, the total production of passenger cars in Germany was roughly at the level of 1985, while exports were at the level of 1998. The greatest danger here is less the technological shift towards electrified powertrains than the threat to both pillars of the German automotive industry's business model. In 2023, Germany was the largest producer of electric vehicles after China, just ahead of the USA. Without the production of electric cars, production in Germany would be at around the same level as in 1966. However, the fact that the conversion of production is already quite far-reaching compared to all locations except China should not obscure the fact that the technological change has opened the door to new challengers who have begun to attack the German automotive industry in its key markets - and with some success. In China in particular, German manufacturers will come under pressure from new manufacturers with electric cars, who are also specifically attacking the premium segment. As a result, German manufacturers will noticeably lose sales volumes, which will also be to the detriment of Germany as a strong export location. There is also a trend towards de-globalization. Protectionist measures against the import of vehicles have increased significantly in recent years. This is bad news for Germany as an export-dependent location.

All in all, the developments initiated at a global level mean that the automotive industry in Germany will shrink rather than grow in the medium term. It will hardly be able to fulfill its role as an industrial growth engine, which it has played since the millennium. The extent of the losses will depend heavily on whether the successful business model can be continued. This will continue to require considerable research expenditure from companies. However, German politicians should also support this goal, as this is a key sector for German industry. First and foremost, classic location policy would be central to this. The automotive industry is increasingly becoming an energy-intensive industry as a result of technological change. Industrial electricity prices are therefore an important issue. Another area of activity for the government is the defense of free trade in cars and the development of public charging facilities for electric cars.