Automotive Manufacturing: Supplier Relationships between Germany and the US
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The US and Germany have a strong relationship in the automotive industry, specifically in supplier relations.? As of March 2024, the US is Germany’s primary trading partner, generating $68 billion in exports and imports in Q1 of 2024. In 2022, the main good exported between Germany and the US were automobiles, with Germany exporting $17 billion worth of cars and the US exporting $6.75 billion. 1 In this article we’ll explore supplier relations, automotive trends, and new market opportunities in Germany and the United States.?
Supplier Relations Between Germany and the US??
In 2015, the United States became Germany’s fourth largest supplier of goods and Germany’s top global customer for automotive. In 2019, exports to the United States accounted for 12.6% of the total value of Germany’s automotive exports, with vehicles as the largest export. 2 These numbers reflect the strength and importance of trade relations between Germany and the US, especially in the automotive market. This relationship continues to grow and change as both countries innovate – and collaborate –?in the automotive sector.?
?Automotive Trends in Germany and the US?
The German automotive industry is known globally for its engineering excellence, innovation, safety, and design. Current trends in the German automotive industry include electric vehicles and autonomous driving. The use of such electric vehicles in Germany is on the rise: back in 2010, then-German Chancellor Angela Merkel set a goal to deploy one million electric vehicles on German roads by 2020. This was achieved in July 2021. Following this trend, in 2022 the German automobile industry produced over € 506 billion in total sales, a significant increase from the previous year of € 411 billion. 3??
Autonomous vehicles are often seen as the next phase in automobile innovation, and Germany is determined to be in the lead, with the goal of decreasing traffic accidents while increasing safety on the road. The Autonomous Driving Act, which permits the operation of level 4 autonomous vehicles – a vehicle that operates completely by itself with no human intervention needed – took effect in Germany on July 28, 2021. On July 1, 2024, Germany launched a self-driving taxi trial which will test level-4 fully autonomous vehicles for future use on public roads.???
The automotive industry in the United States is innovating in similar ways to the German market, focusing on SUVs and trucks, electric vehicles, and autonomous driving. SUVs and trucks consistently outsell sedans in the US, with US consumers preferring a larger vehicle over smaller ones. 4 EVs are less popular in the United States; the US joined the electric vehicle trend after Europe and has 3.3 million electric vehicles on the roads in 2024. This accounts for only 1% of total cars on the road, whereas Germany’s electric vehicles make up 25%, a significant disparity. 5 6 While the US does not have many fully autonomous cars on the roads yet, some companies are in the first phases of rolling out fully autonomous vehicles on US roads. For now, many US cars are equipped with partially automated features such as lane assistance and adaptive cruise control. 7?
New Market Opportunities?
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With electric vehicles and autonomous driving being the newest innovations in the automotive industry, both Germany and the US are looking to expand these markets: in the United States, electric vehicle sales are expected to show an annual growth rate of 18.2%, resulting in an estimated market volume of $162 billion by 2028. 8 In Germany, as more fully autonomous vehicles enter the roads, it is expected that the German fully autonomous vehicles market will be valued at $28 billion by 2030. 9?
Strong Midwest Auto Connection?
The Midwestern United States has a strong connection to the auto industry, with Michigan, Ohio, Indiana, Illinois, and Wisconsin making up the major hubs in the region. The regional economy thrives off manufacturing plants, research facilities, and supplier operations.?
On June 25, 2024, it was announced that Rivian, a US startup, and German automobile manufacturer Volkswagen will be partnering together in a $5 billion agreement to create new technology systems that will be implemented in future Volkswagen and Rivian electric vehicles. This partnership is projected to benefit both countries financially by expanding into the progressing electric vehicle market. Rivian notably has a manufacturing plant in Normal, IL, where the company plans to produce its newest line of R2 electric vehicles.?
GACC Midwest has a broad network and strong footprint of automotive suppliers in the Midwest region. Our Connection Series allows participants to go behind the scenes of German American companies in Illinois and Michigan, focusing mainly on the manufacturing industry. The next Connection Series in Illinois is dedicated to suppliers delivering to, among others, the automotive industry. ?
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