Association of the Automotive Industry warns of location disadvantage in Germany

The German car manufacturer VW is in crisis. VDA President Hildegard Müller talks about the current situation in the automotive industry. Demand for new cars is low and production costs are high.

Volkswagen is currently making headlines: Europe’s largest carmaker has announced a tougher austerity program for its core brand VW – factory closures and redundancies are no longer ruled out.

“The German automotive industry is undergoing a major transformation that is placing considerable demands on the path to climate-neutral mobility,” says Hildegard Müller, President of the Association of the Automotive Industry (VDA). At the same time, incoming orders are poor and production costs are high. Müller speaks of Germany as an expensive location in international comparison. This means that there are high energy and bureaucracy costs.

VDA: Buying a car is a major investment decision

Demand in Europe and Germany is weakening. In addition, the end of the environmental bonus for electric cars has unsettled many customers. For consumers, purchasing a car is a major investment decision, says Müller. “And then you think: do I need the car now? Can I wait a little longer?” In addition, there is a saturated market in Europe. Many already have a car – a new one is a replacement investment.

According to Müller, car companies want to invest around 400 billion euros in climate-neutral mobility and new factories over the next four years; the only question is whether they will still do this in Germany.

Better cooperation in the transition to e-mobility

In addition to purchasing, the charging infrastructure also plays a role in e-mobility. Müller speaks of a complex system of change: “And we need to work together better across sectors. Become faster. Expand power grids, expand hydrogen filling stations.” Since many people live in rented apartments, the practical question arises as to where people can charge a car.

The industry is undergoing a transformation with high investments in innovation, “but not yet the demand and sales markets. And that simply makes the situation complicated,” says Müller.