Key facts
- A VDA survey shows German auto suppliers' outlook has soured, with more expecting deterioration than improvement.
- Planned investments in Germany are being postponed, moved abroad, or cancelled by two-thirds of suppliers.
- Asia is the main region benefiting from investment shifts, followed by other EU countries and North America.
- Hiring in Germany has reached a new low, with over half of companies cutting jobs.
- 44% of companies shrinking their German workforce are hiring abroad.
- Nearly half of suppliers are experiencing increased costs due to the Middle East conflict.
German automotive suppliers are facing a worsening business outlook, with a significant shift towards expecting deterioration over improvement, according to a recent survey by the VDA industry association. This sentiment reversal comes as investment and hiring within Germany decline, with companies increasingly moving operations and jobs overseas, particularly to Asia.
The survey, conducted between May 12 and 24, found that nearly a third of the 116 surveyed suppliers anticipate a worsening situation, compared to only 25% expecting improvement. This contrasts with a January poll where a larger proportion foresaw improvement.
Investment plans for Germany are being significantly impacted, with approximately two-thirds of suppliers reporting that their planned investments will be postponed, relocated abroad, or cancelled entirely. Asia is the primary beneficiary of these shifts, followed by other European Union countries and North America.
The trend extends to employment, with over half of companies cutting jobs in Germany, reaching the lowest hiring rate since the VDA began collecting comparable data in June 2024. Notably, 44% of companies reducing their German workforce are simultaneously hiring abroad.
VDA President Hildegard Mueller stated that the survey results highlight Germany's crisis as an industrial location, citing excessive bureaucracy, high labor costs, and rigid labor laws as pressures on small and medium-sized companies. Additionally, 46% of surveyed suppliers reported increased costs due to the Middle East conflict affecting fuel, energy, and component prices in their supply chains.