Responsible for around a quarter of the country's GDP, the car industry has been slowing down and getting overtaken. Can it find another gear? CGTN's Natalie Carney reports from Wolfsburg.
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NewsTranscript
00:00With its four immense red brick chimneys proudly overlooking the Mittelkanal, few things evoke
00:06a sense of pride for Germans like Europe's biggest automaker.
00:12Volkswagen has been a household name for generations of Germans.
00:15It's employed well over a million people over its near century of operations and produced
00:21and sold far more than that iconic cars worldwide.
00:26But in this age of new technology and new competition, Volkswagen has been struggling
00:31to catch up, a reflection of the wider German economy, which Volkswagen has long been the
00:37driving force behind.
00:39Amidst increased energy costs, rising competition from Chinese manufacturers and low investment
00:45in infrastructure, the car manufacturer has debt of well over 200 billion US dollars.
00:51For the first time in its history, Volkswagen considered closing at least three of its
00:56plants in Germany until bitter negotiations resulted in a deal that would still see the
01:01auto giant slash 35,000 jobs by 2030 to drastically reduce costs.
01:07We have such a long tradition in the automotive industry because within the share of the GDP,
01:13it's like 20 to 30 percent what the industry is producing, but these are underestimates
01:19because they do not include all the interdependencies for services sectors, et cetera.
01:24The demand decreased for these cars, and so we have this decline in the contribution to
01:30the GDP produced by the industrial sector from the automakers.
01:35And this is something that explains our recession.
01:38Germany's Bundesbank has revised its economic growth forecast for 2025 downwards to a mere
01:450.2 percent after two years of decline, in part due to slumping automotive sales.
01:51Many believe Volkswagen could have done a lot more a lot earlier.
01:59We're angry with the managers.
02:00They missed the boat.
02:02We all know that with China, they worked.
02:04They did their homework, but unfortunately, our managers overslept a little.
02:11Others blame the government.
02:12While various federal measures were taken to initially promote the production of electric
02:16vehicles, the subsidy program ended in December 2023 to address budget cuts.
02:23Politicians are now campaigning to rectify this in order to save Germany's most revered
02:27industry.
02:29Chancellor Olaf Scholz and the Social Democrats support the introduction of a transformation
02:33fund to help promote German electric cars through tax breaks.
02:38He has also called for EU-wide incentives.
02:41The conservative Christian Democrats plan to reduce electricity prices by lowering grid
02:46charges and is pushing to reverse a ban on the sale of new petrol and diesel cars from
02:512035.
02:53The most important thing is stable framework conditions, which are not always the case
02:58despite politics.
02:59You simply need a clear guideline for electromobility today and not for combustion engines tomorrow.
03:07These conditions must also include exports, say experts.
03:11When you export like 75% of your cars, it's a question how to keep markets open, how to
03:18keep free trade agreements.
03:19And I think this is something where the next government has to be very clear about to make
03:25good negotiations about the free trade agreements with the biggest markets, and the biggest
03:31markets are in Asia.
03:34Germany's overall industrial strength is showing its age, jeopardizing the country's position
03:39as one of the world's largest economies.
03:42This will undoubtedly be a challenge for the country's next government or Berlin faces
03:47being left in the dust.
03:49Natalie Carney, CGTN, Wolfsburg.