A recent survey by the German Association of the Automotive Industry (VDA) reveals a sombre outlook among German automotive small and medium-sized enterprises (SMEs) for the year 2025, with many companies grappling with economic underperformance and a challenging order situation.
The VDA’s findings indicating that half of the medium-sized automotive companies in Germany have not met their economic performance expectations for 2024.
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An additional 19% stated that their low projections were met but not exceeded, highlighting the sector’s difficulties.
Only a small fraction of companies, 5%, reported exceeding their expectations, while a quarter felt that performance was as anticipated.
Looking ahead, the forecast for 2025 is not promising, with only 17% of surveyed companies expecting an improvement.
Approximately 45% predict no significant change, and 38% fear their economic situation may deteriorate.
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By GlobalDataThe survey, which has been conducted since spring 2020, also reveals that over 65% of medium-sized automotive companies view the order situation as a major challenge.
The previously high order backlog has been cleared, reflecting the impact of sluggish overall economic growth and a weak European car market on these companies.
Investment activity within Germany is notably restrained, with 69% of companies postponing, relocating, or cancelling planned investments.
The tendency to move investments abroad has decreased, with 23% considering this option, the lowest since the survey began.
When the last survey was conducted in May 2024, the figure stood at 37%.
Preferred relocation destinations include Asia, the EU, and North America.
Over half of the companies are reducing their workforce in Germany, while 14% are hiring, and 32% maintain stable employment levels.
In response to the economic climate, 69% of companies are implementing efficiency improvement programmes, 59% are undergoing restructuring, and 29% are considering diversification.
The VDA survey highlights the need for reduced bureaucracy, with 92% of companies urging this as a top priority for the new EU Commission.
Other concerns include improving competitiveness and easing reporting requirements, with 41% advocating for funding programmes tailored to SMEs.
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.
“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.”
