With the automotive industry in Germany facing significant challenges, major manufacturers like Porsche and BMW are looking to the upcoming government elections for potential relief. The situation has been exacerbated by US President Donald Trump’s recent announcement of a 25% tariff on steel and aluminium imports, which is set to take effect next month. This move has raised concerns among German automakers, as approximately three-quarters of cars produced in Germany are exported, making them particularly vulnerable to rising trade barriers.
The US market remains vital for German manufacturers, especially for high-margin combustion-engine vehicles. However, Trump’s threats of tariffs on cars imported from Europe have intensified fears of a trade war that could further disrupt sales and production. Executives from Porsche and BMW are now hoping that the February 23 elections will result in a government more amenable to negotiating with the US administration. Current Chancellor Olaf Scholz has indicated a willingness to support a European response to these tariffs, but many are looking towards Christian Democrat Friedrich Merz, who is seen as a potential successor and has previously described Trump as a “predictable leader.”
In response to the mounting pressures, German automakers are not standing still. They are increasing investments and forming partnerships with local companies to regain lost market share. For instance, Volkswagen aims to boost its sales in China significantly by 2030, while BMW plans substantial investments in its manufacturing base in Shenyang to enhance local electric vehicle production.
Despite these efforts, the transition to electric vehicles has not been smooth for German manufacturers. Porsche has forecasted an €800 million hit this year due to its strategic shift towards expanding its portfolio with more combustion-engine and hybrid models. The company faced a 28% drop in deliveries in China last year, indicating the challenges it faces in adapting to market demands.
As the elections approach, the future direction of Germany’s automotive industry hangs in the balance. The outcome could determine whether manufacturers can navigate the current crisis and adapt effectively to both domestic and international market pressures.
