For every second medium-sized automotive company in Germany (50%), the economic performance of the year so far has fallen short of expectations, and a further 19% see their already poor expectations confirmed. This is one of the results of a current survey that the VDA has been conducting regularly since spring 2020 among automotive suppliers (manufacturer group III) and medium-sized manufacturers of trailers, bodies and buses (manufacturer group II).* Only 5% of companies were able to exceed their expectations; for a quarter of companies, things went well as expected.
The outlook is also clouded: For 2025, only 17% of the companies surveyed expect an improvement compared to this year. Around half of the companies (45%) expect the situation to remain more or less unchanged. And four out of ten companies (38%) assume that their economic development will even worsen.
The order situation is becoming an increasingly serious problem for medium-sized automotive companies, with two out of three companies (65.5%) describing it as a major or very major challenge. This shows that the weak overall economic development and the current weak development of the European car market are increasingly having an impact on medium-sized automotive companies. The high order backlog of the past has finally been worked off.
VDA President Hildegard Müller: “The supplier industry and in particular the numerous medium-sized companies are a key factor for a successful transformation of the German automotive industry. However, the weak demand in combination with the location conditions is becoming increasingly toxic, especially for medium-sized industrial companies. It is now all the more important that the political framework conditions support them – instead of placing additional burdens on them.
The fact is: the suppliers are internationally competitive with their products, but for many companies the location is not. Politicians must finally address the causes of the problems. In concrete terms, this means: we need competitive energy prices, consistent reduction of bureaucracy, infrastructure investments, measures to combat the shortage of skilled workers, and international trade and raw material agreements that must be concluded promptly and on a large scale.”
Suppliers have also recently been faced with significantly more difficult access to bank financing, the VDA President continued. “Banks can improve the situation if they take a more differentiated view of the automotive sector. There are many successful transformation models among suppliers,” emphasises Müller.
Investment cuts at highest level yet
The survey shows that investment activity in Germany remains weak. In view of business expectations, companies are increasingly holding back on investments. Seven out of ten (69%) of companies in our survey stated that they were postponing, relocating or canceling investments they had actually planned in Germany. Around one in four companies (23%) is planning to relocate investments abroad – the lowest figure since this survey was conducted. In the last survey in May 2024, the figure was 37%. The current survey shows that relocation destinations are Asia, the EU and North America (in that order). At the same time, investment cuts are at their highest level to date: 19% of the companies surveyed are planning to cancel investments. What is unchanged from the last survey is that only 1% of companies say they want to increase investments in Germany in view of the current situation. Investment activity in Germany is currently being affected primarily by the current sales situation and sales expectations.
Companies reduce employment
Another result of the survey of medium-sized automotive companies: the proportion of companies suffering from a shortage of skilled workers and labor has fallen significantly. Currently, only 37% of companies are complaining about this shortage, which represents a significant reduction compared to all previous surveys. The proportion of companies that stated that they are having difficulty meeting their short- and medium-term demand for skilled workers has also fallen accordingly (26%). The figures are a warning sign, as they show that the weak overall economic development, particularly in industry, is also reflected in the labor market.
More than half of the companies surveyed (54%) also stated that they are currently reducing employment in Germany. 14% are increasing employment, and in 32% employment figures are remaining constant.
69% of companies are planning efficiency improvement programs in response to the current economic situation and medium-term sales expectations. 59% are relying on restructuring measures, and 29% are aiming to diversify into other sectors.
Reducing bureaucracy is to be top priority for new EU Commission
For medium-sized automotive companies, reducing bureaucracy must be the top priority for the new EU Commission; a full 92% see it that way. This is followed by improving competitiveness (63%) and easing reporting requirements (62%). 41% of companies believe that funding programs tailored to medium-sized companies should be a priority.
*The survey was conducted from October 2 to 21. 145 companies took part. This means that the VDA has representative statements on the current situation and prospects of the automotive industry.
SOURCE: VDA
