Audi-Produktion in Zwickau: Verluste begrenzen
Foto: IMAGO/Teresa Kröger / IMAGO/Kirchner-Media
The employer-oriented Institute IW sees problems ahead for the successful German automotive industry due to recent trends in German foreign trade with China. „The business model that has supported car production in Germany so far – the intercontinental export of high-quality vehicles – is increasingly under pressure,“ say authors Jürgen Matthes and Thomas Puls in a study. German exports to China decreased by over eight percent in the first half of the year compared to the same period last year.
„It is crucial for the further development of export volumes to China in the automotive sector whether it is possible to stabilize the existing business model,“ according to the IW. The quality of Chinese manufacturing has continued to improve, resulting in an increasing production of mid-range vehicles such as the Audi A4 and upper mid-range vehicles (A6) for the Chinese market being done locally.
German manufacturers are less concerned with recovering lost volumes through reshoring, but rather with avoiding further losses. „Since the markets for cars are concentrated in Asia, reshoring to Germany makes little economic sense due to transportation costs.“ To avoid further losses, it will be necessary to strengthen the production network for electrified powertrains domestically by establishing a domestic battery cell manufacturing facility. And above all, to defend dominance in segments such as the upper class or upper middle class even after the switch to electric powertrains.
The European Commission is concerned about the domestic automotive industry being threatened by cheap electric cars from China and is therefore considering anti-dumping tariffs. Some automotive experts are now worried that China may retaliate with significant measures against German car manufacturers operating in China.
The researchers at IW are less concerned about this: „The concern seems unfounded: Especially the German automotive industry increasingly relies on the strategy of local for local in China, meaning they produce their cars on-site for Chinese customers,“ says IW expert Matthes. Therefore, the Chinese government has no interest in obstructing German car companies; doing so would only harm themselves and put Chinese jobs at risk.