Half of Germany’s mid-sized auto firms report poor business situation

Germany’s medium-sized automotive sector is facing mounting pressure, with every second company rating its current business situation as “bad” or “very bad”, according to a new survey by the German Association of the Automotive Industry (VDA). The findings reveal growing pessimism across the sector amid weak demand, rising bureaucracy, and international trade tensions.

The survey, conducted among automotive suppliers and mid-sized manufacturers of trailers, bodies, and buses, shows 80% of companies intend to postpone, relocate, or cancel planned investments in Germany. Meanwhile, 28% plan to shift investments abroad – up from 24% in May – and 17% expect to cancel them entirely.

“The economy, especially industry, has been calling for fundamental reforms for years, but far too little is happening. We as the German automotive industry want to preserve jobs and prosperity here and want to continue manufacturing our products and cars in Germany. But something must be done to achieve this. The German government and EU Commission must set clear priorities for the international competitiveness of the business location.”

The survey also highlights a record-high order shortage, with 77% of companies reporting significant or severe shortfalls in new orders. Excessive bureaucracy remains the top concern for 86% of respondents, followed by weak market demand due to sluggish economic growth and limited progress in the transition to electromobility.

Investment uncertainty is now weighing on jobs: 61% of companies are reducing employment in Germany, the highest level since the VDA began tracking the data in 2020. Only 9% are currently hiring.

International trade policy is adding to the strain—more than half of respondents fear negative impacts on sales and profits from US tariffs, particularly on imports from Europe and Mexico.

Müller emphasized that urgent reforms are needed to safeguard Germany’s position as a leading automotive hub: “The ongoing economic stagnation in Germany and the persistently weak development of the automotive market in Europe are increasingly impacting the medium-sized companies in the German automotive industry. Without the called-for economic stimulus and the strengthening of the location’s international competitiveness, the situation threatens to deteriorate further.”

The VDA survey, conducted from September 1 to 22, included responses from 158 companies and provides a representative snapshot of the current state and outlook of Germany’s automotive mid-market.