Investment Delays Among Auto Suppliers Amid Industry Crisis

The automotive supply sector in Germany is facing significant challenges as economic conditions dampen investment enthusiasm. A recent survey conducted by the German Association of the Automotive Industry (VDA) revealed that approximately 75% of automotive suppliers are considering postponing, relocating, or completely canceling their investment plans within Germany. This figure marks a six percentage point increase compared to a similar survey conducted in October of the previous year.

Notably, nearly 30% of the companies surveyed are contemplating shifting their investments abroad. The VDA indicated that the outlook for both the German and European automotive markets does not support expansion investments, as growth opportunities are increasingly found in other regions.

High labor costs were identified as a primary concern by around 60% of the respondents. Additionally, many companies continue to grapple with elevated energy prices. The low sales expectations for the German and European automotive markets are influencing investment decisions for more than half of the surveyed firms.

The industry's apprehension is further exacerbated by the potential impact of U.S. tariffs under the administration of President Donald Trump. A significant 86% of the surveyed companies believe that these tariffs will affect them, along with numerous other states and regions.

The VDA has reiterated the necessity for reducing bureaucracy and lowering corporate tax rates in Germany. VDA President Hildegard Müller emphasized the urgent need for a comprehensive program aimed at enhancing the attractiveness of the country as a business location and improving competitive viability through concrete reforms.

The survey, which was conducted between February 11 and February 26, included responses from approximately 150 automotive suppliers and mid-sized manufacturers of trailers, superstructures, and buses.