Publications Études de l'Ifri
Frankfurt am Main, Germany - September 17, 2019: World premiere of the luxury car Mercedes-Benz Vision EQS at the Frankfurt Motor Show IAA 2019 (Internationale Automobil Ausstellung

The Automotive Industry: The Achilles’ Heel of German Economy? Etudes de l'Ifri, March 2021

The global car market has been shrinking since 2018. This is a key economic sector for Germany whose producers belong to the Top 15 carmakers worldwide. Yet they are running the risk of being outclassed and eventually replaced, given emerging actors in the USA and China.


These new competitors benefit from the growing digitization of the mobility sector, disruptive economic models and the obsolescence of vehicles with an internal combustion engine. This form of propulsion is progressively being replaced by less-polluting alternatives, which are being endorsed by public authorities.

The Chinese-American rivalry is also impacting German carmakers, whose strategy greatly relies on the globalization of production chains. This has led to major successes in the past, but the threat of a technological decoupling between the USA and China limits German carmakers’ activities in terms of production and exports. Access to the Chinese market, which accounts for nearly 20% of the global population, is indispensable for the German brands that intend to benefit from China’s catch-up effects.

European industrial and political actors plan to invest in promising sectors whilst seeking to respect environmental and social objectives. Also, the European Union (EU), led by a German powerhouse, intends to prevent market distortions such as hurdles to market access, while supporting the emergence of technologies and the compliance with production standards. However, developments in the automotive sector are challenging the EU’s capacity to act in a unified fashion, even if the EU is not seeking to impose its vision on the industry’s private sector, in a top-down manner.


Marie Krpata works as a Research Fellow at the Study Committee on Franco-German Relations (Cerfa) at the French Institute of International Relations – Ifri where she dedicates her research activities to the European Union and the external relations of the Franco-German couple. Before joining the Cerfa she worked in non-governmental and international organizations as well as in consultancies.


This publication is also available in French: "L’automobile, talon d’Achille de l’industrie allemande ?" (pdf).


The Automotive Industry: The Achilles’ Heel of German Economy?
automobile Clean Mobility Economics Energy transition European Recovery Plan future of mobility Green Deal Industrial policy industrial transformation social policy Germany