germany's auto industry faces transformation difficulties
2024-09-06
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xinhua news agency, berlin, september 3 (reporter li hanlin) since the beginning of this year, many german automakers have slowed down their pace of electrification transformation and have focused on future development by drastically cutting costs and laying off employees. volkswagen group issued a statement on the 2nd saying that the company is considering closing one of its car manufacturing plants and a parts plant in germany for the first time. if the plan is implemented, it will be the first time in volkswagen's history that a factory has been closed in germany.
analysts pointed out that since the beginning of this year, many vehicle manufacturers have slowed down their electrification process due to the obvious slowdown in electric vehicle sales. under the influence of multiple factors, the german automotive industry is facing "headwinds" in its transformation, and the automotive industry should avoid the negative impact of "de-industrialization" in a timely manner.
supplier crisis plagues automakers
in the first half of this year, volkswagen group's performance was "increased revenue but not increased profit": although revenue reached 158.8 billion euros, a year-on-year increase of 1.6%, operating profit was about 10.1 billion euros, a year-on-year decrease of 11.4%. at the same time, global sales were about 4.35 million vehicles, slightly lower than 4.37 million vehicles in the same period last year.
blume, chairman of the volkswagen group's board of management, said the environment had become more severe and germany was falling behind in competitiveness. "we must now step up our efforts to create the conditions for long-term success."
this is a photo of volkswagen's global debut of the "california concept" plug-in hybrid camper at the international caravan show in düsseldorf, germany on august 28, 2023. photo by xinhua news agency reporter zhang fanvolkswagen's consideration of closing its german factory reflects the transformation dilemma of the german automotive industry. as a traditional automotive powerhouse, germany has recently faced a wave of bankruptcies and layoffs among its parts suppliers. for example, zf plans to lay off 11,000 to 14,000 employees in germany by 2028; continental has launched a layoff plan for 7,150 people; and bosch plans to lay off 1,200 employees in its software and electronics departments.
data from german consulting firm falkensteeg holding showed that in the first half of 2024, a total of 20 german auto parts suppliers with annual revenue of more than 10 million euros filed for bankruptcy, a surge of more than 60% year-on-year.
the munich institute for economic research business climate index, known as the "barometer of german economic development," showed that germany's business climate index fell to 86.6 points in august, the lowest level in six months. clemens fuest, director of the munich institute for economic research, said that the mood of german companies is low, not only has the satisfaction with the current state of the industry declined, but also the expectations for the future have become more pessimistic.
electrification transformation encounters "headwinds"
data from the german federal motor transport authority showed that in july this year, the number of pure electric vehicle registrations in germany fell 36.8% year-on-year. the market share of newly registered electric vehicles in germany in the first half of the year fell from 15.8% in the same period last year to 12.5%.
since the german government cancelled subsidies for electric vehicles in december last year, consumers have become more cautious, resulting in a continuous decline in electric vehicle sales. many vehicle manufacturers have slowed down their electrification process. mercedes-benz announced at the beginning of this year that it would postpone its goal of 50% electric vehicle sales from 2025 to 2030. porsche announced that it would abandon its goal of 80% of new car sales by electric vehicles by 2030. volkswagen group is also considering closing its audi q8 e-tron electric vehicle production plant in belgium.
new energy vehicles on display at the german brand audi booth, photographed on april 14. xinhua news agency reporter yang guanyuarno antlitz, chief financial officer and chief operating officer of volkswagen group, said: "the future of the automotive industry is electrification. however, in the european market, traditional fuel still maintains a dominant position. volkswagen group will continue to invest in research and development and production in the field of traditional fuel to consolidate its current foothold."
thomas peckron, vice chairman of the german association of the automotive industry, pointed out that market demand is slowing down and the investment in electric vehicle research and development is huge, which is a great challenge to the profitability of enterprises. for this reason, many multinational automakers have adjusted their electrification strategies, relying on internal combustion engines again and adopting a "dual oil and electric" strategy.
automotive industry experts believe that although german automakers have temporarily slowed down their pace of electrification, as technology continues to advance and the market gradually matures, these automakers are likely to reinvest in electric vehicle business in the future and find new entry points.
the effect of "de-industrialization" continues to emerge
at present, the german economy is facing multiple challenges such as high inflation, high interest rates and weak export demand. fuest once said that germany faces the risk of "de-industrialization", some industries such as the chemical and automobile industries are experiencing shrinkage, and automobile production has been declining for many years.
since the outbreak of the russia-ukraine conflict, the eu has followed the us in imposing an embargo on russian natural gas, leading to tight energy supply and increased inflationary pressure. the us took the opportunity to export high-priced natural gas to europe, further pushing up europe's energy costs, which in turn had a huge impact on germany's energy-intensive industries.
on march 6, u.s. federal reserve chairman powell attended a hearing at the u.s. congress in washington. xinhua news agency (photo by aaron)the unilateral industrial policy of the united states is also an important factor that exacerbates the difficulties of the german manufacturing industry. the u.s. inflation reduction act introduced a number of measures, including high subsidies, to promote the development of electric vehicles and other green industries in the united states. this move has led many european companies to shift their investment plans to the united states.
zheng chunrong, director of the german research center at tongji university, said that the effect of "de-industrialization" cannot be ignored. germany is a manufacturing country. if the process of "de-industrialization" continues, the long-term development of the german economy will face a huge impact. although germany has introduced support policies to try to enhance the competitiveness of germany's industrial location, the effect remains to be seen.
in addition, germany is hit by the double blow of economic recession and weak export demand. at the same time, the shortage of professional labor has become a long-term challenge.
