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Industrial crisis in Germany: record decline in production!
Germany's industrial production will fall sharply in August 2025. Experts warn of further declines. Insights into the situation.
Industrial crisis in Germany: record decline in production!
In August 2025, industrial production in Germany recorded a significant decline of 4.3 percent compared to the previous month of July. This decline is of worrying proportions and represents the largest drop in production since Russia's attack on Ukraine in 2022, as reported Mercury reported. In a three-month comparison from June to August, production also fell by 1.3 percent. Compared to August 2024, the decline is 3.9 percent.
The automotive sector is particularly affected, recording a dramatic decline of 18.5 percent in August compared to July. This decline is largely due to factory holidays and production changes. Industrial production excluding energy and construction also fell sharply, with a decline of 5.6 percent between July and August.
Declines in various sectors
The data shows that all three major sectors of the industry were affected by the declines. The developments are as follows:
| sector | Decrease (%) |
|---|---|
| capital goods | -9.6 |
| Consumer goods | -4.7 |
| intermediate goods | -0.2 |
While energy-intensive industries recorded a seasonally adjusted increase of 0.2 percent, experts believe this increase is not enough to halt the overall trend. Analyst Jens-Oliver Niklasch even warns of a further decline in economic output in the third quarter of 2025.
Fears about the future of Germany as an industrial location
The German Chamber of Commerce and Industry (DIHK) sees the current figures as a warning signal for the core industrial sectors. DIHK economic expert Jupp Zenzen identifies high energy and labor costs as well as tax and bureaucratic burdens as major problems for Germany as an industrial location. These challenges could further jeopardize competitiveness.
The Federal Ministry of Economics predicts weak economic development in the third quarter of 2025. Commerzbank chief economist Jörg Krämer emphasizes that factory holidays and production changes are the main reasons for the decline and that a recovery in industrial production can only be expected next year if government spending is increased.
In the context of the automotive industry, it is also important to note the challenges facing this sector. According to a report by IW Cologne, the automotive industry will be characterized by various structural changes in the coming years that will have a significant impact on production methods. For more details, see the comprehensive report IW Cologne.
In addition, a report from EY states that Germany will face significant challenges in 2025 that could impact the competitiveness of the automotive industry. These findings are in the report by EY explained in detail.