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

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.