Germany wants to save its crisis-hit automotive industry

Faced with new competition and the end of government incentives, the German car industry is plunging into an unprecedented crisis.

VW crisis 2024

Photo by: Volkswagen

By: Thibaud Comparot

Published by: Angel Sergeev

Sep 26, 2024 at 3:54am ET

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At the end of a "crisis meeting", Robert Habeck (the German Minister for the Economy) stated that "This round table was very, very useful and instructive" without, however, making any concrete announcements about the next steps. "We can only discuss it behind the scenes and then come up with the results and present them", he added.

The German minister could only note the precarious situation in which the German automotive sector finds itself, and was rather sceptical about the coming months: "For the moment, we don't see any change in the very short term".

Indeed, the German automotive sector, and Europe in general, is under pressure from the arrival of "new players who are naturally making the cake to be shared smaller".

For several weeks now, sales of electric vehicles have been plummeting, putting automotive giants such as the Volkswagen Group in serious difficulty. In the coming months, the group could be forced to close some of its factories, a first in the manufacturer's 80-year history.

Crise Volkswagen 2024

Volkswagen

Faced with a crisis situation, German carmakers are calling for rapid aid to support an industry that is crucial to the country. They have therefore set out their demands for aid as quickly as possible. They have asked for incentives to stimulate vehicle sales in the short term, "especially in the entry-level segments", as confirmed by the Minister for the Economy. This request comes at a time when Germany put an end to bonuses for the purchase of electric vehicles last January, causing a serious drop in sales in this sector.

For its part, the Volkswagen Group, through Oliver Blume, is calling for consideration to be given to tax incentives "for vehicles used for professional purposes" and for "registrations of new electric vehicles", while also asking for consideration to be given to the price of electricity "which plays a considerable role in recharging" vehicles.

Germany's auto industry is in trouble:

Crisis: Volkswagen breaks with unions in Germany

Volkswagen halts ID.3, Cupra Born production in Germany over demand concerns - report

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Finally, Ola Källenius, CEO of the Mercedes-Benz group, also reminded the meeting that "we need to talk again about CO2 regulation in Europe".

Last week, the majority of European carmakers urgently requested support measures from Brussels. They are worried that they will not be able to comply with the new CO₂ standards that will come into force in 2025. This request echoes the low sales of electric cars, which exposes them to potentially huge financial penalties, running into billions of euros. The German car industry, meanwhile, is going through a very difficult period, with production down 25 per cent since 2018, according to an analysis by the IW Institute.

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