The German passenger car market has recovered in the last three months. In fact, more combustion vehicles — i.e., pure diesel and gasoline — have been sold again. According to the DAT Barometer (Deutsche Automobil Treuhand), the three-year slump in the car market could, therefore, be over. Nevertheless, sales are still a long way from the pre-corona year 2019.
Unfortunately, this does not apply to electromobility
While electromobility continues to grow worldwide, even in the USA, the brief stagnation has ended, and Germany continues to fall short of expectations. The self-proclaimed green flagship and energy turnaround nation is collapsing faster and faster economically, demonstrating how starkly self-image and public image differ.
The supplier industry is suffering
Germany is a car nation. It still is. However, the ecological turnaround in transportation remains a pious wish that does not seem to be unfolding. Medium-sized companies such as VARTA (batteries), ZF (gearboxes), and Recaro (the former number one in car seats) are cutting jobs on a grand scale, going bankrupt, or looking for their entrepreneurial future elsewhere in the world.
Employment in the automotive supply industry has fallen from 311,000 (2018) to 270,000 employees in 2024.
‘Deindustrialization’ is not taking place
These three examples, which are representative of many German companies, show impressively that not even traditional companies are immune to the harsh reality in Germany. And yet the Ministry of Economic Affairs, as well as the government-affiliated Berlin NGO, the DWI (German Institute for Economic Research), continue to deny the danger of deindustrialization. Even renowned publications such as SPIEGEL are regularly surprised when the negative economic data pours in.
The annual meeting of the Bavarian chemical associations took place 10 days ago. The demands of the lobby association are demands that are present everywhere in the German economy: Lower industrial electricity costs (≤ 4 ct the kWh) and significantly less bureaucracy.
Both also affect the other transformation industries in Germany. Electromobility is hardly making any progress, especially due to economic uncertainties. Electricity prices are also putting a damper on the switch from traditional gas heating to heat pumps, and the median wealth of Germans is falling, partly due to the revaluation of real estate caused by the government, which should secure the retirement of many people. The plan for a hydrogen pipeline network is only likely to make matters worse: higher energy costs and investments that are hardly worthwhile but will continue to burden citizens.
It is therefore not surprising that the popularity of the current government has recently fallen to an all-time low – electoral researchers put the Greens, as the ideological leadership of the federal government, at just 10-11% support.
The sick man of Europe
So, is Germany once again the sick man of Europe? Everything speaks for it. The pessimists, or should I say realists, among the economic forecasters see the decline of entire key industries looming: the automotive industry, the chemical industry, the construction industry, mechanical engineering, the list goes on.
Almost all of these industries are coming under increasing pressure. By China, yes, but more by the EU legislation from Brussels, the EU bureaucracy, and the domestic bureaucracy trying to go one better.
The DIHK (German Chamber of Industry and Commerce) has just discovered in a survey that 37% of all companies are now considering relocating their production abroad. In 2022, this figure was still 16%.
Wrong decisions by companies also lead to problems
‘Deindustrialization’ also involves companies making the wrong decisions. German OEMs initially missed out on electromobility. Nevertheless, the causes are largely to be found in political misguidedness, economic policy that places ideology above common sense, and an actionist EU that, in my opinion, is ultimately doing more and more damage to the European idea.
Speaking of China: even the Middle Kingdom, the world’s largest car sales market, cannot save the German OEMs, as the Chinese trend of preferring domestic brands is continuing. According to analyses by Strategy&, a subsidiary of pwc, almost 65% of all cars sold there by Chinese OEMs in June of this year were already produced in China. This is 25 percentage points more than in 2020 and a jump of 12 percentage points compared to June 2023.
After years of a creeping “planned economy”, German society wants the German idea of success, known as the “social market economy”, back. The dynamics of the economic miracle of the last century, which is primarily attributed to Ludwig Erhard, are virtually being conjured up.
However, this would require a new, truly outstandingly fast “German speed”, which must apply to every company, every political party and every citizen in Germany.
This would be a blessing for the transport transition, as it would even accelerate the ecological transformation.
Related Posts
