Analysis: German Car Manufacturers Suffer Market Decline
In the world of automotive manufacturing, German suppliers have seen a significant shift over the past decade. According to a recent study by Strategy&, a consulting firm part of PwC, the global market share held by German suppliers dropped from 26% in 2014 to 23% in 2024.
These suppliers play a crucial role in the competitiveness of the automotive industry, not just producing parts but also contributing significantly to innovations. However, the global revenues of the ten largest car manufacturers stagnated last year, while the automotive suppliers slightly increased their revenues from 1.14 to 1.15 trillion euros.
The study suggests that domestic companies in the German automotive industry need to accelerate development and production, but more importantly, undergo a fundamental change of thinking. This change involves exploring new technological fields rather than continuously improving existing products.
The rise of Chinese automotive manufacturers has been a major factor in this shift. Chinese companies, which played no role on the global market 20 years ago, have increased their share to 12% in the same period. These companies offer significant price advantages to their customers and are faster in developing and bringing new products to market compared to German manufacturers.
Important German automobile companies such as Volkswagen, BMW, Mercedes-Benz, Audi, and Porsche remain key players but have been surpassed by Chinese firms like BYD in the battery and software sectors. Volkswagen leads in European electric vehicle sales, but challenges persist in battery technology where Chinese companies have outpaced some German efforts. Porsche, for example, has shelved its battery project while Chinese firms expand aggressively.
The losses of German suppliers are mainly due to the sales losses of European manufacturers, who are their main customers. German car manufacturers have lost ground especially in China, where local manufacturers also source their parts predominantly from Chinese suppliers.
The German automotive industry has faced a severe crisis in the 1990s and has proven in the past that it can not only overcome crises but also grow from them. Henning Rennert, one of the authors of the study, stated that the pressure is high, but the industry has the potential to adapt and thrive.
However, the industry is expected to face more unemployment due to cuts of 50,000 jobs in one year. The authors of the study recommend that companies in the German automotive industry should focus on innovation and technological advancements to maintain their competitiveness in the global market.
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