Work is well underway at the Herbst car repair shop in central Berlin. Inspections, repairs, wheel replacement. There are several identical, white leasing Volkswagens waiting for their turn, as well as an old Volvo and a worn-out Caddy. The family car repair shop has been operating since 1990 and has experienced many economic crises and good times. Now, says Ralf Graf Adelmann, is a good time.
The number of clients increases and calendars are full. – People repair old cars instead of buying new ones – explains Adelmann. And they don't buy because the waiting time for deliveries is now long, 8-9 months, and on the other hand, customers don't know what to buy. Will it be possible to drive combustion cars in a few years, or should we opt for an electric car? Companies are also cautious and extend leasing contracts while waiting for political decisions. So a dozen or so Adelmann employees don't have time to be bored. We could use more of them, as shown by the advertisement for mechanics stuck on the window offices.
The Herbst workshop is no exception. Schedules in Berlin workshops are full, and you can't count on a major repair within a week. Some people go to towns near Berlin in Brandenburg, where costs are lower. There are even ideas to go to Poland for repairs, just like before to the hairdresser and for cigarettes. Cars on German streets are now 10 years old – an upward trend. The stereotype of Germans in new Mercedes and Volkswagen cars is becoming a thing of the past.
The competitors left the German automotive industry
The automotive industry has been the flagship segment of the German economy for years. In 2023, it employed nearly 800,000 people. people – twice as many as in Polish mining in 1990. The German brands VW, Audi and BMW were a symbol of reliability and comfort – and Germany. Now this symbol is wobbling. In addition, it involves numerous other industries dependent on it: companies that produced parts and components for vehicles, or machines for their production, but also service providers.
The largest German concern, Volkswagen, is struggling with serious problems. It is considering closing three production plants in Germany and, in recent days, laying off 3,000 people. employees announced by the German branch of Ford. The crisis affects their suppliers – on Friday (November 22), Bosch, a component manufacturer, announced a plan to liquidate 5,000. jobs, and at the beginning of the week the company Johann Vitz GmbH & Co. filed for bankruptcy. KG, producing parts and operating on the market for 116 years. FZ Friedrichshafen, a global giant in the components and parts industry, plans to lay off 14,000 jobs. employees in Germany.
In addition to general problems that affect the whole world, such as dramatically rising energy costs, the reason is also the decades-old belief that the German automotive industry is so strong that nothing can harm it – and nothing needs to be changed, emphasizes Prof. Stefan Bratzel, director of the Automotive Management Center (CAM) in Bergisch-Gladbach. – We did not expect such rapid development towards electromobility and vehicles using software. The competition – not only Tesla, but especially Chinese manufacturers – is developing much faster than expected by German producers, says the expert.
Now the Germans have to make up for this delay – because it turned out that the Chinese competition's cars are not far behind the German ones in terms of innovation or comfort. However, they are priced much lower. This means that the demand for expensive German cars will decrease. – You can't win on price, so you should focus on greater innovation – says Bratzel. Otherwise, the crisis will only deepen.
Poland is also suffering
And this is not good for Poland either. Although some Polish politicians and citizens observe the problems of the German market with malicious satisfaction, this crisis is also painfully felt by Polish entrepreneurs. Germany is Poland's largest trading partner. This year, Polish exports to this country amounted to over PLN 160 billion. More than one third are products of the automotive industry: parts and components, as well as finished vehicles, with a total value of PLN 55 billion. zlotys. When production in Germany decreases, the demand for products from Poland also decreases.
Małgorzata Bieniaszewska sees this in her orders. It includes the MB Pneumatyka company near Zielona Góra, which has been producing components for trucks for 20 years. Its most important recipient for years was Germany. Fortunately, says Małgorzata Bieniaszewska, they have also been developing contacts on non-European markets for some time. – Otherwise, we would be in big trouble now – says an entrepreneur from Lubusz. Orders from Germany dropped by up to 40 percent. Diversification of contractors allowed the company to reduce losses – but not avoid them. – Other markets, generally the whole of Europe, depend on the German market – explains Małgorzata Bieniaszewska about the system of connected vessels in the industry. – If the market in Germany is shaky, orders from other European countries are lower.
Still in March they invested in new buildings and production lines, today they are fighting for stabilization. – We have known since March that it is getting worse. The third quarter was very difficult, the current one is similar. And the next two quarters of 2025 will not be easy either, says the entrepreneur.
Closing factories in Germany affects Poland
It is not easier for other Polish companies in this industry. Already in April, the Boryszew Group, the largest Polish manufacturer in the automotive industry, announced the decision to declare bankruptcy of its two German daughter companies. The companies produce galvanized plastic elements used for car equipment and injection molds. The company cited “problems with obtaining new orders from major customers and lower than expected implementation of current contracts (…) and high production costs” as the reasons for the decision.
Discussions on Polish internet forums suggest that Germany will invest more abroad – read: in Poland, where costs are lower and the bureaucracy is not so extensive. German experts dispel these speculations.
Volkswagen is investing in Central and Eastern Europe, but its plants produce mainly budget models, the production of which in Germany would be too expensive, explains Stefan Bratzel from CAM. Meanwhile, the fight is taking place at a higher level. – Moreover, these are production branches. Projects and new solutions are created in Germany. If things go badly at the headquarters in Germany, it will be bad also in the foreign daughters. Professor Joerg Rocholl, rector of the European School of Management und Technology in Berlin, has a similar opinion. – Poland gains more from demand from Germanythan it would gain from individual and not necessarily long-term increased investments. The fact that Germany will close three VW factories in Germany does not mean that they will open them in Poland. They simply won't be there. However, the demand for components from Poland will decrease due to three fewer factories.
It hasn't been this bad since the war
In 2023 and 2024, Germany was hit by a recession. If the situation does not improve in 2025, it will be the first such situation since World War II. This will be a real structural problem that can only be solved through deep reform, adds Professor Rochell. Therefore, the economy will be a central topic during the early Bundestag elections in February 2025.
Only politicians and reforms can help the German economy, says Ralf Graf Adelmann from the Herbst workshop. “It's disastrous,” he says bluntly. They have 1,500 regular customers, mostly companies. – Every week or two for several months, one of them files for bankruptcy – adds Adelmann.
So although he doesn't have to worry about downtime for now, he's not happy at all. – We can be sure of a good situation for about two years, then everything is uncertain. We don't know whether we will have enough employees or whether we will be able to repair the cars that customers will buy – because if they are Chinese electric cars, we will have to invest in training and new equipment. And that requires loans. Will we be able to afford it?
According to automotive expert Stefan Brezel, the current stock of cars in Germany will keep workshops and streets busy for about 10 years. Then new ones will have to appear. The question is: will they be German Volkswagens and Mercedes, or will they be cars from China and the Far East? It's hard to imagine Germany without VW, especially for the Germans themselves.
The article comes from the website Deutsche Welle