- Germany’s car industry was once recognized around the world for its high-quality, innovative internal combustion engine cars. But things have changed since then.
- The industry is facing a range of issues, from regulation to macroeconomics, China and EVs.
- Issues in the automotive sector may also have spill over effects onto the wider German economy, which has been struggling for some time now.
Compete on quality, not price.
I don’t think the German car industry has ever competed solely on price. Outside Germany and some European countries, German brands are luxury items. In Germany, they oscillate between bread-and-butter and above-average.
The problem is value-for-money and market fit. German car makers (used to) have the best margins in the most expensive products, luxury items sold outside of Germany. Those cars aren’t built to last (like a Japanese car) nor are they fancy (like the first Tesla model).
German ICE cars are (and have always been) less reliable than Japenese cars. And more expensive. And come with very basic interior design / electronics unless you go for the luxury option.
AND NO EVs.
Who buys German cars? Show me one person who wants a VW.