Germany will choose a new Bundestag composition on Sunday. Chancellor Olaf Scholz will probably lose the mandate to manage the government. Surveys are more likely to win the parties of Christian Democrats under the leadership of Friedrich Merz. However, regardless of who forms a new (probably coalition) government, he will have to face a crisis in the German automotive industry. The car industry of this country accounts for about five percent. economy and employs almost 780 thousand people. Last year's announcement of group layoffs and the closing of Volkswagen factories in Germany was widely recognized as one of the symbols of the fall not only of this industry, but also the entire German economy.
“Deprecious situations in German factories”. It will have to fix the new government
– The topic of Germany's economic crisis, in particular in the context of the automotive industry, is one of the most important points in the current campaign. Every week information about subsequent producers and suppliers, often companies by 50- or even 70 years of internship, which declare bankruptcy. Such events create an election context and in some way weaken the mainstream parties – says in an interview with Next.gazeta.pl Dr. Konrad Popławski, OSW analyst for German economy. He emphasizes that Germany does not need revolutionary changes, but maybe it will be necessary to leave some “erroneous concepts”.
“The automotive industry in Germany is struggling with a serious problem of excessive production capacity, where the level of production significantly exceeds the decreasing demand for vehicles. Historically German manufacturers cars They maintained high levels of production, but now the market struggles with decreasing sales because of such factors as long -term effects inflationlittle interest in consumers in electric vehicles, economic and commercial uncertainties, as well as exacerbating ecological regulations. This imbalance leads to excess stocks, unused factories and growth operating costs” – enumerate German analysts of industry problems in report Allianz Research. “The situation is additionally complicated by the strong impact of trade unions, which make it difficult for companies to implement savings activities or adapt the number of employees without encountering significant objection. As a result in 2024, some factories in Germany still operated at full speed despite the weakened demand, which led to an abnormal situation, in whose thousands of cars stood for months without buyers ” – they add.
The Chinese want to take over German factories. Will they use German money?
The errors made in the past want to be used by the Chinese. It is increasingly talking about the fact that Chinese investors are interested in German Volkswagen factories, which have financial problems. On the one hand, this could bring profits to German producers and reduce costs, but on the other hand it would make it easier for Chinese to access the European market. Interestingly, they could buy these plants in fact for German money. – They can buy Volkswagen factories thanks to penalties for “failure to meet ecological regulations”. Volkswagen got them because in Europe there is a system of transfers, under which producers who have too emission fleets, must pay penalties or conclude contracts with producers who are more ecological, e.g. manufacturers of electric cars from China – explains Dr. Konrad Popławski.
– This system works on the principle of compensation: the manufacturer must pay a certain sum under the contract. So there is a risk that these transfers from Volkswagen to Chinese producers can be used to buy its factories that fall. This shows how tragic the policy of the European Union is. Instead of helping producers who already have huge problems, he adds new difficulties and weakens them towards competition from outside the Union – adds OSW analyst. However, in order for such a acquisition to take place, German politicians must agree, who rather avoided this topic during Wyborcza. – This is quite an uncomfortable topic for German politicians. Making such decisions that can evoke negative emotions will not bring them popularity. It is difficult to expect someone to openly comment on this matter, because it can be treated as a political error that will only irritate voters. These types of situations show the current weaknesses of Germany. It is symbolic that even the Chinese buy companies that once taught their automotive industry – says Dr. Konrad Popławski.
On the one hand, we have German technology, German factories, often very traditional, devoting them to the Chinese is some kind of humiliation, but on the other hand losing jobs is an even bigger problem
– adds the analyst.
Donald Trump will kill Germany? The duties will be severe
The threat is not only coming from China. There is also Donald Trump, who threatens the whole world with the duties. Mechanical vehicles and their parts accounted for 16.8 percent. exports and were the main export product of Germany in 2024 – Germany did not draw conclusions from the previous Trump election campaign. Already then he signaled that the export of Germany, as well as all of Europe, is too large to the American market, which means that American producers cannot count on analogous benefits on the part of the European market. He emphasized that the US would strive to compensate for this situation, using their customs policy – explains Dr. Konrad Popławski.
Analysts of Allianz Research in the report published in February 2025 calculated that the entire car market will increase by 2 percent this year. However, it will be mainly driven by China (4 percent) and the USA (2.5 percent), while Europe will probably lag behind (1.5 percent). The main reason has been indicated by the tests related to the duties, which can be an additional great obstacle to the industry, especially in Germany. Volkswagen, BMW and Mercedes have factories in Canada and Mexico, which can feel the policy of Donald Trump the most, which will intensify this crisis.
– The introduction of duties, especially in the context of the economy, which has been struggling with a delicate recession for two years and cannot rebuild after a pandemic, is a disturbing signal. This situation calls into question the future of the German economy, which is highly oriented to export, which has been emphasized for years by both German and foreign economists. Excessive dependence on exports can lead to risk in times of crisis – adds OSW analyst.
All hope in the new government. Elections this weekend
In the face of all this, it seems almost certain that the automotive industry will be one of the biggest challenges for Germany in the coming months and one of the main problems of the government, which will probably be formed in a few months. – I believe that the automotive sector will be one of the elements that will be in the coalition agreement. None of the problems of the automotive industry has long been solved. All the difficulties we have observed for three or five years agothey only deepen and grow – predicts Dr. Konrad Popławski.