Germany’s automotive sector is poised for a massive €500 billion investment surge by 2029, according to figures released by the Verband der Automobilindustrie (VDA), the country’s automotive industry association. While the commitment signals continued innovation and a drive towards future mobility, it also exposes a growing concern regarding the competitiveness of Germany as a manufacturing hub.
The VDA estimates that between 2025 and 2029, automakers and suppliers will channel approximately €320 billion globally towards research and development, alongside a further €220 billion allocated to tangible investments-primarily for the construction and modernization of production facilities. These funds are heavily focused on the development of novel propulsion systems, reflecting the industry’s necessary pivot towards electric and alternative technologies.
However, Hildegard Müller, President of the VDA, flagged a troubling trend: an escalating proportion of these substantial investments are now being directed outside of Germany. “It’s alarming that the majority of these investments are now flowing abroad” Müller stated in an interview with Bild newspaper. This shift implies a decline in Germany’s appeal as a primary location for automotive production and innovation, potentially jeopardizing the nation’s historical dominance in the sector.
The impact on Germany’s economic prosperity and employment figures is projected to be significant. Müller’s warning underscores a need for urgent political action. She is calling on the federal government to drastically reduce regulatory burdens and bureaucratic hurdles, ensure access to affordable energy and implement a more competitive tax system. The plea represents a clear sign of industry frustration with Germany’s current economic climate and a pointed critique of the government’s ability to foster an environment conducive to sustained automotive investment and job creation. Failure to address these concerns, the VDA implies, risks further erosion of Germany’s automotive industry leadership and a potentially devastating impact on the country’s economy.
