The global car market is changing, and many believe the end of an era for German vehicles is near. Yes, BMW, Volkswagen, and Mercedes could be hanging by a thread, and it all comes down to the big fight to dominate the market that we are currently witnessing. Electric cars, autonomous driving… and Chinese manufacturers are stepping on the gas, taking ground from European cars.
And many fear that these three brands could cease to exist as we know them before the decade ends…
Moritz Schularick, economist and president of the Kiel Institute for the World Economy, believes so. He does not want to sound the alarm, but he is aware that the traditional business model can no longer be stretched.
A new market
Germany has been at the top of the industry for decades, supported by three basic pillars: perfect combustion engines, luxury brands, and local production. Those were the three ingredients that took it to the top, but that is no longer enough.
According to Schularick, the new world order is dominated by those who control software, batteries, and artificial intelligence, and the Germans are not very present in this fight.
“These brands probably will not disappear,” the economist clarifies, “but they could completely transform, even partner with foreign investors”
Something similar happened with Volvo a few years ago, which was reborn after being bought by the Chinese group Geely.
The revolution slipping away
While Tesla, Google, or Baidu are testing self-driving cars in real traffic, Europe seems not to have realized this new movie.
“We are focusing so much on electrification that we have forgotten the next revolution”
And indeed, autonomous driving is going to be the real battlefield of the automotive industry, but there are still those who do not want to see it or do not trust it.
Germany (and Europe as a whole) may have fallen a bit behind in this regard, and change is not waiting for them.
Between denial and fear
The economist’s words, as expected, were not well received in the sector.
Hildegard Müller, president of the German Association of the Automotive Industry, responded that the forecast is “absurd” but she admitted that energy prices and the lack of a clear industrial policy are making things difficult, so, absurd but not entirely.
From the government, Green Party minister Cem Özdemir expressed confidence in the German industry and dismissed the idea that Chinese investors could take control of national manufacturers. “Everyone should do their job” he said, but it seemed as if he was ignoring a giant behind him.
Brands at risk?
- Porsche, for example, has just suffered a brutal 95.7% drop in profits.
- Mercedes-Benz, although it boasts design and technology, cannot maintain stable profitability, and that is not sustainable.
- And BMW, despite the good results of its electric line, still seems to be drifting without direction…
What once were untouchable brands now seem to be walking a tightrope for not knowing how to adapt to the market.
The end of the German engine?
There is something bigger at stake here than profits: the German automotive identity.
For more than a century, the roar of a German engine has been a symbol of progress and national pride, but the future no longer sounds the same, in fact, it does not sound at all.
Everything is changing, and although Germany was once in the top three, it is no longer behind the wheel. So, either it reinvents itself, or it will end up being a spectator of its own history.