For years the German automotive industry has been benefiting from the economic upturn in China, whose rapidly growing middle class has helped it achieve continuous and profitable growth. The shift in sales and profits eastwards has led to a clear dependency on China. The high margins are now at risk due to increasing pressure from a slowdown in Chinese economic growth and emerging local competitors. The transformation of drive technologies due to a rise in the relevance of e-mobility also offers the possibility of overstepping Germany’s technological lead in internal combustion engines. What does this mean for the German automotive industry?
In our current Flash Analysis KfW IPEX-Bank's analysts shed light on how the developments in China affect Germany's automotive industry and describe the resulting opportunities and challenges that will arise in the short to medium term.
Author: Mladen Hucic, Credit Risk Management department of KfW IPEX-Bank
Published: May 2022