1. Home
  2. Studies
  3. An Industry under Pressure: The Importance of the Automotive Industry for Germany
Thomas Puls / Manuel Fritsch IW-Report No. 43 7. September 2020 An Industry under Pressure: The Importance of the Automotive Industry for Germany

The German automotive industry can now look back on a golden decade. Between 2008 and 2018 its businesses reached numerous record peaks in sales. The main driver was the strong market growth in China.

The Importance of the Automotive Industry for Germany
Thomas Puls / Manuel Fritsch IW-Report No. 43 7. September 2020

An Industry under Pressure: The Importance of the Automotive Industry for Germany

IW-Report

Share this article:

or copy the following link:

The link was added to your clipboard!

The German automotive industry can now look back on a golden decade. Between 2008 and 2018 its businesses reached numerous record peaks in sales. The main driver was the strong market growth in China.

German car manufacturers and suppliers managed to secure a strong position in China unlike their European competitors. This enabled the automotive sector to increase its value added in Germany too and it outgrew the other manufacturing industries. Therefore, the economic importance of the automotive industry increased in Germany over the last decade. In the year 2017 the global demand for cars generated 9.8 percent of the overall gross value added and 7.2 percent of the total employment in Germany. It is notable that 47.5 percent of all patent applications of legal persons in Germany came from the automotive industry. It played a keyrole for innovation Germany. But the golden decade came to an end in 2018. In 2019 the global automotive market began to shrink. Added to this was the fact that the drive train technology shifted towards electrification. This represented a huge challenge to small and medium sized suppliers. In spring 2020 the Corona-Pandemic hit the automotive sector with tremendous force. Global supply chains were cut and in April 2020 almost the automotive production was put on hold. Next to 60 percent of the total employment of the German automotive industry was on short time work. Corona amplified several negative trends and it is expected that many jobs will get lost due to the economic impact of the pandemic. The impact of the pandemic is rather huge due to the fact that the automotive sector was already occupied with a transformation process which made it more vulnerable to external shocks. But the negative impact is not evenly distributed in the automotive sector. Car manufacturers and the system suppliers are better prepared than highly specialised small- and medium sized suppliers. They are in the centre of the upcoming crisis because the negative impacts of the economic downturn of the global market, the shift in technology and the impact of the pandemic cumulate in this part of the German automotive industry.

 

The Importance of the Automotive Industry for Germany
Thomas Puls / Manuel Fritsch IW-Report No. 43 7. September 2020

Thomas Puls / Manuel Fritsch: Eine Branche unter Druck – Die Bedeutung der Autoindustrie für Deutschland

IW-Report

Share this article:

or copy the following link:

The link was added to your clipboard!

More on the topic

Read the article
An Assessment Using the IW Business Location Index
Cornelius Bähr / Hubertus Bardt IW-Trends No. 3 20. September 2021

Germany as a Business Location after the Grand Coalition

The demands of digitalisation and climate protection are creating an additional need for fundamental renewal of Germany’s capital stock.

IW

Read the article
Hubertus Bardt / Karl Lichtblau IW-Analyse No. 139 8. September 2020

Industrial Policy in Germany

Although manufacturing industry forms the principal economic basis for the country’s prosperity and employment, industrial policy does not have a good reputation in Germany. This is because the term is usually used to mean selective state intervention in ...

IW

More about this topic

Content element with id 8880 Content element with id 9713