Germany—Autoland Under Pressure

Research evidence excerpt

Germany—Autoland Under Pressure

Goldman Sachs European Economics Analyst

market shares due to Chinese competition this drag could double, while a build out

of the domestic value chain for electric vehicles could induce limited growth over the

next years.

Since peaking in 2017/18, the German automotive industry has been in a long downturn

(Exhibit 1). Production has declined by 25% to 30% below its peak, real orders and

revenues have declined by about 15%, and employment is also down almost 20%,

particularly for suppliers.1 Plans by major German car manufacturers to cut more jobs

and reduce production capacity in Europe have raised concerns over the impact on the

German economy. In this Analyst we take stock of the macroeconomic relevance of

Germany’s automotive industry, the reasons for the recent downturn and the outlook for

car manufacturing in Germany.

Exhibit 1: The German Auto Industry Has Been Struggling Since 2017/18

RHS: Employment is measured for all companies with 50 or more employees. Employment at smaller companies accounts for about another 119k employees in the

aggregate auto industry.

Source: Haver Analytics, Goldman Sachs Global Investment Research

Autoland Germany

Germany’s car industry is at the heart of German manufacturing. It directly accounts for

4% of total value added and 2% of total employment, more than three to four times the

share in other large European economies (Exhibit 2, left). Through supply chain linkages,

the car industry supports another 2% of value added indirectly in other domestic

industries (Exhibit 2, left).2

1 The stronger decline in production relative to real turnover is likely related to a shift in the product mix

towards higher value-added cars, particularly while supply chains were disrupted in 2021 to 2023.