Opinion: Will Germany’s Automotive sector keep up? The Need for Political Backbone
Sven Brandelik
Digital Transformation Leader @ Accenture | Technology Value Creator | Enterprise Agilist | Sustainability Ambassador | Entrepreneur | Networking Enthusiast
My writing reflects solely my own opinion, not the one of my employer
Mercedes-Benz just reported a staggering 54% drop in profitability from last quarter. VW? Even steeper at 64%. And it's not just the automakers. Suppliers like ZF, Continental, and Bosch are planning massive layoffs. Thousands of jobs. I could go on, but you get the picture. It's easy to hear numbers like this and see doomsday for the German economy—a country that relies so heavily on a strong automotive industry.
Last week, a study from the German Association of the Automotive Industry (VDA) shed some additional light on what’s likely coming for Germany’s automotive job market. The shift to digital and green technologies could lead to major disruptions, with the potential to reshape employment as we know it in this sector. According to VDA, around 190,000 jobs could be lost by 2035—a quarter of which have already disappeared.
And as if the economic strain wasn’t enough, the “traffic light coalition” -the current German government formed by SPD, Greens, and FDP- is on shaky ground. Rumors of a breakup within the month aren’t just political noise; they’re existential for industries that rely on government stability and support.
The Real Problem: Not Just a Tech Gap, But a Policy Void
For Germany’s auto industry, digital transformation isn’t just about updating tech; it’s about navigating a deeply intertwined political landscape. Without a cohesive government-industry approach on infrastructure, workforce training, and regulation, German OEMs risk ceding global leadership. It’s a race against time, and only bold political moves can make it happen.
Unlike Silicon Valley or China’s agile innovators, German auto players—BMW, Volkswagen, Mercedes-Benz, as well as their often Germany headquartered key suppliers—are adapting under a heavier load of traditional, less nimble structures. Over the past 20 years, disruptors like Tesla have shown what’s possible with a “software-first” approach, redefining everything from over-the-air updates to user-centered, data-driven vehicles.
German OEMs have been slower to adapt. Encumbered by their legacy operations, they’re pivoting just as the stakes skyrocket. Not a good approach, for sure. They have been heavily criticized for it. But this is where we are today.
If We Want Results, We Need Long-Term Thinking
Here’s what the industry really needs, beyond quick policy fixes like EV incentives and stable energy rates. Yes, those are immediate needs. But if we’re serious about transformation, the next government must focus on these four core areas:
1. Revamp Workforce Skills
The shift from traditional engineering to tech-first roles demands massive upskilling. Large-scale initiatives to reskill the workforce are no longer optional; they’re essential.
2. Invest in Digital Infrastructure
Germany’s digital backbone—5G, secure networks, and universal platforms—is outdated. Government and industry need public-private partnerships to bridge these gaps and make data flow across sectors seamlessly.
3. Balance Green Policies with Industrial Needs
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Emission regulations and climate targets can’t be ignored, but neither can the fiscal strain they place on OEMs. Balanced policies and financial incentives are key to making green transitions viable for the industry.
4. Build Resilient Supply Chains
Dependence on global supply chains leaves German OEMs vulnerable. Securing local suppliers and forging European partnerships can create stability in sourcing critical resources.
Investment, Predictability, and Policy
The VDA projects billions will be needed to bring digital transformation to life—from infrastructure to skills development. To make this feasible, Germany’s “Schuldenbremse” (debt brake) rule needs to be reconsidered, new partnerships to be formed. We need predictable, stable fiscal policies that give OEMs confidence in investing for the long haul.
At a cross-road
Germany’s auto industry stands at a crossroads. It’s time for all of us—industry insiders, policymakers, and stakeholders—to take a stand and forge a cohesive, forward-looking path. So here are the question to all of us: How can we create a regulatory environment that encourages bold transformation? And how can public and private sectors work together to build a resilient, competitive automotive future?
Leave your thoughts in the comments!
#automotive #leadership #Germany #innovation
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References:
German Association of the Automotive Industry (VDA). "Transformation could cost around 190,000 jobs by 2035 - A quarter of these have already been lost - location policy must accompany upheavals," October 29, 2024.
FAZ (Frankfurter Allgemeine Zeitung). Political analysis of the "traffic light coalition," including the risk of government instability and its implications for German industry.
Digital Transformation Leader @ Accenture | Technology Value Creator | Enterprise Agilist | Sustainability Ambassador | Entrepreneur | Networking Enthusiast
3 周The next remarkably bad figures... Confirms the trend and increases the urgency to act... https://www.livemint.com/companies/news/bmw-net-profit-drops-84-percent-amid-china-sales-slump-vehicle-recall-issues-business-auto-news-luxury-cars-challenges-11730881468444.html
I help SaaS companies match with top tech-talents from around the globe ?? | Co-Founder TeamPilot.io | COO at Exevator AB
3 周Great article Sven Brandelik! How about the access to energy? How do you see that impacting?