The German Automotive Industry under Geo-Economic Pressure: From Hegemony to Structural Vulnerability

Ana-Cristina Bâlgăr ()
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Ana-Cristina Bâlgăr: Institute for World Economy, Romanian Academy Calea 13 Septembrie, Nr. 13, Bucharest, Romania

Global Economic Observer, 2026, vol. 14, issue 1, 7-21

Abstract: While the automotive industry has historically been at the core of Germany’s economic strength and acted as a major driver of the country’s export performance, it now reveals some of the most significant challenges facing the national growth model. Against this backdrop, the article examines how the traditional advantages of Germany’s automotive industry have gradually turned into structural vulnerabilities, arguing that its current difficulties cannot be reduced to a cyclical downturn or to a delayed transition to electromobility and digitalisation. Instead, this evolution reflects a more profound transformation in the factors that have long sustained German manufacturing performance. Conventional sources of industrial advantage, such as engineering specialisation, export orientation, extensive integration into global value chains, and reliance on dynamic foreign markets, have become channels of exposure amid the recent intensification of geo-economic rivalry, China’s rise in the electric vehicle sector, the resurgence of U.S. industrial policy, and the reconfiguration of global technology chains. Drawing on evidence related to gross value added, employment, foreign trade, vehicle production, and the shift towards electromobility, the paper highlights the progressive weakening of the long-standing pattern of German automotive performance. The analysis concludes that the German automotive industry is not merely undergoing a phase of sectoral adjustment, but has entered a broader process of strategic recalibration, whose outcome will shape Germany’s ability to preserve its position as a major manufacturing power in an increasingly fragmented world economic order.

Keywords: German automotive industry; geo-economic rivalry; structural vulnerability; electromobility; global value chains; industrial policy; strategic recalibration (search for similar items in EconPapers)
JEL-codes: F14 L52 L62 O33 (search for similar items in EconPapers)
Date: 2026-06
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