Customs tax debates in global markets, protectionist policies in some major markets, high production costs and structural changes in the Chinese market continue to negatively affect the German automotive industry.
These increasing macroeconomic uncertainties regarding the future of the sector and the profit warnings issued by manufacturers one after another bring about historical declines in the stock performances of automotive companies traded on the stock exchange.
Downward revisions in sales figures, financial results and profit forecasts announced by manufacturers also directly affect this downward trend in the Frankfurt Stock Exchange.
German manufacturers, which have been dependent on internal combustion engines for a long time due to the political and legal framework that remains unclear throughout Germany and the European Union (EU), are struggling with the difficulties brought by the transformation process.
In addition to high production costs and shrinking profit margins, manufacturers directly feel the pressure of US customs tariffs, crises in the Middle East and rising energy prices on their balance sheets.
Shares have melted since the beginning of the year
The increasing share of local manufacturers in the Chinese market and intense competition directly affected the global delivery figures of German automotive brands. In the first half of the year, passenger vehicle sales in the Chinese market decreased by 28 percent for Mercedes-Benz, 26 percent for Volkswagen and 20 percent for BMW.
In this process, BMW AG announced that it would eliminate 8 thousand administrative and R&D positions, which correspond to 5 percent of the global workforce of approximately 154 thousand people, by the end of 2027. Its second quarter net profit decreased by 35 percent to 1.2 billion euros. Following the developments, the company's share loss in the stock market reached 43.33 percent since the beginning of the year.
Shares of Volkswagen AG, which revised its profit margin forecast to 1 percent due to the contraction in global markets and operational costs, fell by 36 percent this year. Volkswagen, which has doubled the scope of its employment reduction program, is undergoing a downsizing process by planning to lay off 100 thousand employees and close 4 factories in Germany.
Due to the conditions in the Chinese market, the company's third quarter passenger vehicle deliveries decreased by 8 percent on a global basis, and total vehicle sales decreased by 6 percent to 491 thousand 600. Mercedes-Benz Group has wiped out more than 700 million euros in assets in this country due to stiff competition. While the operating profit of the company's core automobile division fell by 25 percent to 909 million euros, its shares fell 35 percent compared to its level at the beginning of the year.
While luxury sports car manufacturer Porsche AG plans to reduce its employment in Germany by 5 thousand people by 2035 within the scope of savings measures, the company's global deliveries in the January-September period decreased by 16 percent to 178 thousand 532. Porsche's stock market loss was recorded as 9.79 percent compared to the beginning of the year.
The sector is struggling in the crisis
This financial squeeze in the German automotive industry is directly reflected in leading economic data.
According to the results of the current Business Environment Survey published by the Economic Research Institute (Ifo), the German automotive industry business environment index, which was minus 22 points in August, dropped sharply to minus 35 points in September.
While companies' current situation assessments fell below the lowest level seen in the first half of the year, business expectations, which dropped sharply in August, remained low in September.
Ifo Center for Industrial Organization and New Technologies Expert Anita Wölfl said, "The automotive industry continues to struggle in the swamp of crisis." made his assessment.
The crisis environment was also reflected in other leading indicators. Export and employment expectations, which showed a temporary recovery between July and August, started to decline again in September. While companies' order stocks were evaluated lower than in the previous month, third quarter earnings were seen to decline significantly compared to the second quarter.
High production costs deepen structural crisis and employment losses
The automotive industry accounts for 5 percent of total added value and 3 percent of employment in Germany, while maintaining its position as the country's largest industrial sector in terms of revenue. Approximately 725 thousand people, excluding suppliers, are employed in the sector, which includes approximately 14 percent of employees in the industry and achieves foreign sales of 280 billion euros, corresponding to 16.2 percent of total exports in 2025, but due to the effect of the contraction in global markets, employment in the sector has decreased by 6.2 percent compared to the previous year.
According to the analysis of management consultancy company Oliver Wyman, the average labor cost in the production of a car in Germany is 3 thousand 307 dollars, while this figure is calculated as 597 dollars in China and 305 dollars in Mexico. This emerging cost gap accelerates the shift abroad in the German automotive industry, which has long organized its production network on a global scale.
Data from the German Automobile Association (VDA) reveals that the number of cars produced in Germany has decreased by 28 percent since 2016 and that more than 7 out of every 10 German-branded vehicles are now produced outside the country. Although producing in the region where the market is located reduces logistics costs and exchange rate risks, it requires factories in Germany to work with a focus on high efficiency rather than relying only on the brand image.
This bad state of affairs in the automotive industry, which has been one of the three pillars of German engineering since the 19th century along with chemistry and machinery, goes beyond economic borders.
This structural crisis, faced by the country's global symbols Volkswagen, Mercedes-Benz and BMW, not only shakes the livelihoods of thousands of employees and the country's economy, but also directly affects the German national identity, social peace and fragile political balances, feeding far-right political movements.
