German auto industry on the brink: innovation or end for the future?

German auto industry on the brink: innovation or end for the future?

The German auto industry is currently confronted with a variety of challenges that are questioning its former leadership position in the global market. Once recognized as a pioneer in the automotive industry, Germany is increasingly losing its importance. High energy prices, an acute shortage of skilled workers and the lack of local battery production are slowing down the competitiveness of manufacturers. Currently only 30% of cars are produced in Germany, which shows the alarming trend towards outsourcing production, especially among renowned manufacturers such as BMW and Mercedes. These developments were made by WKO highlighted.

In addition, Chinese vehicle manufacturers such as BYD are rapidly gaining market share, which is further exacerbating the situation for German producers. A key reason for these downward trends is Germany's lag in battery technology and the implementation of artificial intelligence (AI). Experts such as Thomas Bauernhansl from Fraunhofer IPA and Claudia Hillegaart from AC Automotive confirm that Germany has strong research networks and a well-developed infrastructure. Nevertheless, the transition to electromobility is slow, with almost 40% of the value of electric cars in the future coming from the battery.

Urgent need for transformation

The transformation within the auto industry is therefore of utmost importance. According to a study by Deloitte We are observing a significant change from the area of ​​combustion technologies to alternative drives, with electromobility being the focus. Companies are currently faced with various shrinkage options, such as quickly exiting the market or skimming off existing markets. However, to secure the future of the industry, they should focus on growth opportunities, such as technological leaps through acquisitions or internal skills development.

The progress of this transformation will occur in seven phases, starting with a strong focus on combustion technology and steadily moving towards a full focus on electric mobility. Assessing progress is a challenge because it cannot be done exclusively on the basis of hard facts such as sales or profits, but is also heavily dependent on management's self-assessment. 52 companies are currently following the Harvest approach and relying on developing their own competencies, while only a few choose exit or consolidation as a strategy.

Innovative ability as a key factor

The future of the German auto industry ultimately depends on its ability to innovate. In order to remain competitive, companies must be prepared to use the potential of AI and humanoid robots to increase productivity and efficiency. However, experts warn that this requires a courage to implement that many companies do not currently have. The course for success in the age of electromobility must be set now in order to overcome the backwardness that exists in global competition.