High labor and energy costs: Germany is becoming increasingly unattractive for the German automotive industry.
The industry association VDA sounds the alarm.
Currently there is not much left of the beautiful global corporate world.
The supply chains are disrupted or even interrupted - which is why many a customer currently has to wait quite a while for their vehicle - and the economically liberal vision of global free trade is being replaced by more and more walls of protectionism.
But at some point this situation will probably calm down and international trade will pick up speed again.
It remains to be seen whether this will happen to the extent known so far.
But the economies are too intertwined for national solo efforts to make any sense.
Nations like the former export world champion Germany depend on flourishing foreign trade in order to generate economic growth.
Car production in Germany unattractive?
Industry association VDA sounds the alarm
China is in a similar situation.
Even if the Middle Kingdom is striving for the greatest possible self-sufficiency from the world market in the long term, the premise "from China for the world" still applies.
The question is how Germany will fare in the upcoming global competition.
A decisive factor in striving for the place in the sales sun are the wage costs and Germany has a bad hand there, especially in comparison to China.
In the Middle Kingdom, new car brands have been springing up almost like mushrooms for a number of years.
In the meantime, Chinese vehicles have also achieved top marks in crash tests, which strengthens the self-confidence of the Chinese, who demand ambitious prices for their cars - and thus probably scare off one or the other customer in this country.
Car production in Germany unattractive?
Hourly wages in China significantly lower
“In our figures, we assume hourly wages in Germany are four to five times higher than the average value for China.
In my opinion, that is a conservative assessment.
Usually, gross monthly wages are compared, but it should be noted that the working hours vary from month to month.
For our analysis, we assume 40 working hours per week in production.
However, Chinese workers have significantly fewer vacation days per year than German employees.
Officially, it's five to ten days a year, but individual contractual regulations can deviate significantly from this," explains Heiko Weber from the management consultancy Berylls.
According to an expert, Chinese manufacturers can beat the competition by up to 10,000 euros when it comes to the production costs of an e-car.
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Is car production in Germany becoming too expensive?
The industry association VDA sounds the alarm.
(icon picture)
© Kirchner-Media/Imago
Car production in Germany: High energy costs increase the locational disadvantage
The Munich strategy consultancy has even more bad news in its quiver when it comes to producing the cars.
According to the experts' analyses, the share of energy costs per vehicle in Europe in 2022 was around 800 euros.
Even if the situation in the energy sector is currently easing somewhat, the level of this cost factor remains high and thus increases the locational disadvantage of German car manufacturers.
A comparison with 2021, when an average of only 300 euros was incurred per vehicle, makes the increased financial burden clear, since energy costs in this country are among the highest in Europe.
Especially since the values for the USA or China are always far below.
"The year 2022 marks a change of era in the area of energy costs for the automotive industry," explains Berylls energy expert Dr.
Alexander Timmer and backs up his thesis with an example whose numbers are not very encouraging: At peak times, the price difference for one megawatt hour of electricity between the USA and Europe was an unbelievable 800 euros.
Currently, the numbers have converged again, but the MWh in the USA is still between 200 and 300 euros cheaper than in Europe.
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Car production in China: Lower wages compared to Germany reduce manufacturing costs (symbol image)
© VCG/Imago
Car production in Germany: location not internationally competitive?
A survey by the Association of the German Automotive Industry (VDA) shows the effects of these parameters.
As a result, nine out of ten companies currently consider Germany to be internationally uncompetitive as a business location.
The results of the answers from the 116 companies surveyed paint a bleak picture: while 45 percent still wanted to postpone their investments in September 2022, it is currently only 28 percent.
However, the proportion of companies that are shifting their investments abroad or want to cancel them entirely is increasing: 28 percent want to invest the money in other markets, which is six percent more than in September last year, 14 percent are canceling investments completely (September 2022: nine percent).
And what about investments in Germany?
Only two percent plan to do so.
An adoring value.
Car production in Germany: A shortage of skilled workers is also a major challenge
According to suppliers and medium-sized automotive companies, high electricity prices and a shortage of workers and skilled workers are currently the greatest challenges. The consequence is fatal: some companies are planning to shift investments abroad.
This means that jobs will be lost, especially in rural areas, where many of the Tier III and IV suppliers are based.
This is bad news for the local job market.
Because the backbone of the German automotive industry consists not only of the large suppliers such as Bosch, Continental or ZF, but also of the downstream links in the production chain.
If there is a lack of technical expertise in these areas, or if parts are produced too late or of insufficient quality, the complex clockwork of the German car manufacturer comes to a standstill.
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Car production in Germany: VDA calls for a reduction in bureaucracy
“More and more companies consider Germany to be internationally uncompetitive, which is not good evidence of German industrial policy.
The result shows once again that we urgently need an ambitious location program: less bureaucracy, more trade agreements, a competitive tax system, simpler and faster planning and approval processes.
In addition, our energy and raw material supplies must be secured with international partnerships if we want to make Germany and Europe more independent.
With all of this, politicians need more speed and determination, otherwise we are increasingly in danger of falling behind internationally,” VDA President Hildegard Müller sounds the alarm.
Once the train has left, it's difficult
(Wolfgang Gomoll/press inform)
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