Germany's automotive industrial base is under acute pressure as suppliers signal intentions to reduce capital spending inside the country and to shift investments abroad, an industry lobby group said. The association urged policymakers in Berlin and Brussels to prioritize measures that promote growth and preserve the manufacturing ecosystem.
Presenting the findings of a recent survey of small and medium-sized enterprises in the auto supply chain, the industry group reported that 72% of respondents expect to cut back their investment activity in Germany. The breakdown of responses showed that 28% plan to move investment overseas, 25% intend to postpone planned spending, and 19% said they would cancel investments altogether.
The association's president described the situation bluntly, saying that "Germany is experiencing a huge crisis as a business location." She emphasized that the investment choices revealed in the survey are already having tangible consequences for the labor market.
The survey, conducted between January 11 and January 25 and encompassing 124 companies, found that just under two-thirds of those firms reduced headcount in Germany over the past year. Among all respondents, 87% pointed to competitive disadvantages as a reason for workforce reductions. At the time of the survey, 49% of firms said they were cutting jobs in Germany, while only 7% reported cutting positions abroad.
Industry participants have been confronting a mix of weaker order books, intensified competition from foreign companies, and a demanding shift in technology and product mix toward electric vehicles and software-driven platforms. Major carmakers and suppliers have announced sizable job reductions in recent months, exemplifying the strain across the sector.
Government statistics released in November show that employment in Germany's automotive industry has fallen to its lowest level since 2011, underscoring the scale of the decline.
The association's leadership warned that the erosion of jobs and investment carries political as well as economic consequences. They noted that parties on the far right are focusing on workplaces where employment security has weakened. "The migration of investment and employment will not be without consequences for our country's prosperity and for its social and political stability," the president said, highlighting potential societal fallout if current trends persist.
On policy, the association criticized a proposed package from the European Union intended to support carmakers' transition to electric vehicles and greener production methods. The group said the current EU proposals fall short of what is required for an automotive nation and called for incentives driven by market mechanisms rather than additional regulatory obligations.
The association's stance mirrors appeals from major German carmakers for greater flexibility in EU targets linked to the electrification of vehicles, arguing that rigid rules could accelerate the relocation of investment and jobs outside Germany.
Context limitations: This report reflects the survey results and statements presented by the industry association and the government employment statistic referenced. It does not introduce facts beyond those provided in those sources.