STRUGGLING TO ADJUST
While Germany may be renowned for its manufacturing prowess, it has struggled to adjust as the world shifts from petrol combustion engines to battery-powered vehicles.
This requires entire new software and supply chains – something that has been tough for the EU’s biggest economy to adapt to.
Any attempts on their part to catch up are further hampered by increased energy costs for production, high labour costs when compared with other countries like China and India, as well as stringent EU regulations.
On top of that, United States president-elect Donald Trump has warned that a minimum 10 per cent tariff could be applied to Europe’s vehicle exports to America, with German car brands attracting his ire over trade deficits.
Experts say a major gear shift is needed if German companies hope to combat issues of structural competitiveness.
“Germany is at a crossroad to decide which direction we go. Either we continue being in the situation that we are … or we do a change of our frameworks… (to become) competitive again,” said Thorsten Alsleben, managing director of Berlin-based free-market think tank New Social Market Economy Initiative.
“Of course we have to do reforms in the companies, but more in the politics (side). When we do that, it will be hard, but when we do that, in the next two or three years, we can be successful as we have been before.”
OPPOSED TO TARIFFS
To try and shield its auto sector from what it says is unfair state-backed subsidies, the EU recently announced additional tariffs of up to 36.3 per cent on Chinese-made EVs.
