Germany's auto industry slowdown symbolizes country's economic slump

CGTN Europe

Responsible for around a quarter of the country's GDP, the car industry has been slowing down and getting overtaken. Can it find another gear? CGTN's Natalie Carney reports from Wolfsburg.   #auto #germany  Read more ⬇️ https://tinyurl.com/4zu4mjpa

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00:00With its four immense red brick chimneys proudly overlooking the Mittelkanal, few things evoke

00:06a sense of pride for Germans like Europe's biggest automaker.

00:12Volkswagen has been a household name for generations of Germans.

00:15It's employed well over a million people over its near century of operations and produced

00:21and sold far more than that iconic cars worldwide.

00:26But in this age of new technology and new competition, Volkswagen has been struggling

00:31to catch up, a reflection of the wider German economy, which Volkswagen has long been the

00:37driving force behind.

00:39Amidst increased energy costs, rising competition from Chinese manufacturers and low investment

00:45in infrastructure, the car manufacturer has debt of well over 200 billion US dollars.

00:51For the first time in its history, Volkswagen considered closing at least three of its

00:56plants in Germany until bitter negotiations resulted in a deal that would still see the

01:01auto giant slash 35,000 jobs by 2030 to drastically reduce costs.

01:07We have such a long tradition in the automotive industry because within the share of the GDP,

01:13it's like 20 to 30 percent what the industry is producing, but these are underestimates

01:19because they do not include all the interdependencies for services sectors, et cetera.

01:24The demand decreased for these cars, and so we have this decline in the contribution to

01:30the GDP produced by the industrial sector from the automakers.

01:35And this is something that explains our recession.

01:38Germany's Bundesbank has revised its economic growth forecast for 2025 downwards to a mere

01:450.2 percent after two years of decline, in part due to slumping automotive sales.

01:51Many believe Volkswagen could have done a lot more a lot earlier.

01:59We're angry with the managers.

02:00They missed the boat.

02:02We all know that with China, they worked.

02:04They did their homework, but unfortunately, our managers overslept a little.

02:11Others blame the government.

02:12While various federal measures were taken to initially promote the production of electric

02:16vehicles, the subsidy program ended in December 2023 to address budget cuts.

02:23Politicians are now campaigning to rectify this in order to save Germany's most revered

02:27industry.

02:29Chancellor Olaf Scholz and the Social Democrats support the introduction of a transformation

02:33fund to help promote German electric cars through tax breaks.

02:38He has also called for EU-wide incentives.

02:41The conservative Christian Democrats plan to reduce electricity prices by lowering grid

02:46charges and is pushing to reverse a ban on the sale of new petrol and diesel cars from

02:512035.

02:53The most important thing is stable framework conditions, which are not always the case

02:58despite politics.

02:59You simply need a clear guideline for electromobility today and not for combustion engines tomorrow.

03:07These conditions must also include exports, say experts.

03:11When you export like 75% of your cars, it's a question how to keep markets open, how to

03:18keep free trade agreements.

03:19And I think this is something where the next government has to be very clear about to make

03:25good negotiations about the free trade agreements with the biggest markets, and the biggest

03:31markets are in Asia.

03:34Germany's overall industrial strength is showing its age, jeopardizing the country's position

03:39as one of the world's largest economies.

03:42This will undoubtedly be a challenge for the country's next government or Berlin faces

03:47being left in the dust.

03:49Natalie Carney, CGTN, Wolfsburg.

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