The Role of the Automotive Industry for the German Economy and from a European Perspective

The Role of the Automotive Industry for the German Economy and from a European Perspective

The Automotive Industry is a key sector of the German economy. Automotives substantially contribute to value added, employment and exports. 30 per cent of total intramural R&D expenditure in the German enterprise sector is conducted in the Automotive Industry. Based on extensive material input linkages to its suppliers, Automotives provide important innovation impulses for other sectors. The key role of the Automotive Industry for the German innovation system particularly rests on the industry’s specialisation on premium products, i.e. high-quality upscale cars. Many innovations in Automotives are first developed for this segment before trickling down to other product segments.
Following a severe economic crisis in the early 1990s, the German Automotive Industry successfully recovered, and the economic situation of car producers in Germany improved significantly. There are still a number of challenges the German Automotive Industry has to cope with:

  • Increasing cost pressure on domestic production locations from Eastern Europe and emerging economies such as China and India, including the entrance of new competitors from these regions.
  • Rapid increase in oil price.
  • Tightened demand on cutting environmental impacts.
  • Shortening of product life cycles and increasing development costs for new cars.
  • Continuing consolidation of the industry through mergers, acquisitions and strategic cooperations.

Against this background, the project aims at:

  • Measuring and discussing the significance of the Automotive Industry in Germany in terms of value added, employment and foreign trade.
  • Identifying the role of the Automotive Industry for other industries, both with respect to inputs of materials and services (input-output analysis) and in terms of technological linkages through mutual innovation impulses, inventions and R&D.
  • Capturing the use of resources in terms of investment in fixed assets and labour demand by type of qualification, and analysing production costs and productivity in order to evaluate the state of technical advance and international competitiveness.
  • Exploring the role of domestic demand as a driver for innovation and growth (e.g. the role of the German market as a lead market), and as a potentially limiting factor since domestic demand in Germany was growing at a slower pace than world-wide demand.

Depending on data availability, analyses will be conducted with a long term view, going back to 1980. The main focus, however, is on the development since the mid 1990s. Throughout the study, the situation of the German Automotive Industry will be compared to international developments, particularly in other European countries. Country focus will be laid on France, Italy, Spain, USA, Japan as well as Eastern Europe and Asia.

Project members

Christian Rammer

Christian Rammer

Stellvertretende Leitung

To the profile
Christoph Grimpe

Christoph Grimpe

Research Associate

To the profile

Selected Publications


Deputy, Dr. Christian Rammer
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