05
SEP
2023
As confirmed by the Federal Ministry for Economic Affairs and Climate Protection (BMWK), the automotive sector is still "the largest sector of the manufacturing industry" and by far the "most important industry" in the Federal Republic in terms of turnover. 1] According to the Association of the Automotive Industry (VDA), sales were recently increased from around 411 billion euros in 2021 to a good 506 billion euros in 2022; foreign sales (352 billion euros, plus 29 percent) increased considerably more than domestic sales (154 billion euros, plus 12 percent). However, the number of employees continued to decline: If it was still around 809,000 in 2020, it only reached 774,000 in 2022. It is noteworthy that the number of cars manufactured in Germany has fallen significantly; while around 5.75 million vehicles were still produced in this country in 2016, it was only just under 3.5 million in 2022. The decline in production, most recently due to the consequences of the Covid-19 pandemic and the lack of components such as semiconductors, was accompanied by a weakening of the EU market, which is by far the most important for the German automotive industry. The number of new registrations there in 2022 with 9.26 million passenger cars was 4.6 percent below the already weak previous year - as low as it has been since 1993.
In addition to the weakening of production and sales, the German automotive industry is currently lagging behind in the switch to electric mobility. This is particularly evident in China, which is currently by far the largest market for electric cars. By the turn of the year 2022/23, around 14.6 million electric and hybrid vehicles were newly registered there - 53 percent of the 27.7 million electric and hybrid vehicles worldwide. 2] The lead of the People's Republic increases even further: In 2022, almost 61 percent of all new registrations of electric cars worldwide were made in the country. Chinese manufacturers in particular benefit from this. The market leader in China was BYD ("Build Your Dreams") from Xi'an in the first half of 2023 with a share of around 25.7 percent. 3] The US company Tesla (14.7 percent) was followed by four other Chinese companies (GAC, Geely, Changan, Nio) with market shares of 2.8 to 9.9 percent; BMW (2.3 percent), Volkswagen (1.9 percent), Audi (0.6 percent) and Mercedes (0.5 percent) were far behind. Due to the Chinese electric car boom, Volkswagen has lost its market leadership in the People's Republic for the first time since the 1980s: The group was only in second place in the first quarter of 2023 due to its electric car weakness - behind BYD. 4]
This has consequences. None of the major German car manufacturers can afford a lasting weakness in the Chinese market: All of them recently generated a good a third of their global sales or even more. Because the People's Republic has long been considered a global leading market in electromobility, the German car companies are increasingly moving research and development capacities there. Volkswagen, for example, announced in April that a development, innovation and procurement center would be built in Hefei, southern China, for around one billion euros. There, the development time for fully networked, intelligent electric cars should be reduced by almost a third. In the VW Group, there is talk of "China speed." 5] The fact that the People's Republic no longer only produces, but also conducts research and development has consequences: Of the approximately 220 billion euros that the German car industry wants to invest in research and development in the years from 2022 to 2026, according to VDA data, less and less is being spent in Germany. In addition, VW in China, for example, is now dependent on the work of Chinese rivals. For example, Volkswagen recently entered into an alliance with Xpeng, a Chinese electric car manufacturer; Xpeng will equip VW with software and autonomous driving capabilities in the future. 6] Volkswagen's independence is thus gone.
In addition, the German car manufacturers are threatening to come under pressure from Chinese competition in their home market in the near future. Chinese car manufacturers have now significantly increased their exports thanks to their strength in electric mobility and exported more vehicles (1.07 million units) in the first quarter of 2023 than corporations from Japan (954,000) and Germany (840,000). 7] Their market share in Europe is growing; after 0.1 percent in 2019, it already reached about 1.7 percent in 2022 and rose to 2.3 percent from January to July 2023.[ 8] They are now also succeeding in expanding their sales in Germany. For example, they were able to increase their share of German electric car imports from 7.8 percent in the first quarter of 2022 to 28.2 percent in the first quarter of 2023. 9] They can hope for further growth. Surveys show that the proportion of Germans who do not exclude the purchase of a Chinese electric car has risen from 30 percent in December 2022 to 42 percent in May 2023. 10] An important argument is the price: If there is hardly any electric car in Germany today that costs less than 40,000 euros, industry experts considered it conceivable that manufacturers from China "seize in volume segments below 30,000 and 20,000 euros," it says. This could prove to be a "super-GAU for the European car industry." 11]
Meanwhile, the German authorities stand out against climate protests against the IAA with extraordinarily harsh repression. As of Monday, 27 climate activists were taken into so-called preventive detention in Munich; they are accused of allegedly planning protests against the IAA. The activists are to remain imprisoned until at least the end of the week, two of them for a period of even four weeks. Not one of them has been guilty of any crime so far. "Locking people up for weeks to prevent them from participating in protests" is "neither compatible with the principles of the rule of law nor with human rights," criticizes Amnesty International. The "so-called preventive custody" was "originally introduced" "in order to be able to counter the most serious violent crimes and terrorist threats", but has been used "for over a year ... regularly against peaceful demonstrators who want to draw attention to the climate catastrophe." 12] Amnesty, often quoted by the Federal Government when it goes against non-willing states, rejects, according to a statement "this action ... as contrary to human rights".
[1] Automotive industry. bmwk.de.
[2] Every second electric car drives in China. tagesschau.de 02.08.2023.
[3] Lazar Backovic, Franz Hubik, Roman Tyborski: How BYD & Co. stir up German car manufacturers. handelsblatt.com 03.09.2023.
[4] BYD replaces VW as the market leader in China. tagesschau.de 18.04.2023.
[5] Lazar Backovic: VW invests one billion in innovation center in China. handelsblatt.com 18.04.2023.
[6] Christian Müßgens: This is how VW wants to stop the decline in China. faz.net 26.07.2023.
[7] China is export world champion in cars for the first time. spiegel.de 03.07.2023.
[8] Lazar Backovic, Franz Hubik, Roman Tyborski: How BYD & Co. stir up German car manufacturers. handelsblatt.com 03.09.2023.
[9] Imports of electric cars from China are rising sharply. spiegel.de 12.05.2023.
[10], [11] Lazar Backovic, Franz Hubik, Roman Tyborski: How BYD & Co. stir up German car manufacturers. handelsblatt.com 03.09.2023.
[12] Germany: Preventive custody for climate protectors is a clear violation of human rights. Press release from Amnesty International Germany. Berlin, 04.09.2023.