The global car industry saw steady growth in 2024, with the world’s 16 largest carmakers increasing their total revenues by 1.6%, surpassing €2 trillion in total sales. However, German brands failed to keep up. A report from EY showed that BMW, Mercedes-Benz, and Volkswagen recorded a combined revenue drop of 2.8%. Among them, Volkswagen was the only one to see a small increase, while Stellantis performed the worst, suffering a sharp 17% decline.
Even though Germany’s top three carmakers still brought in nearly €613 billion—around 30% of the global total—their market share is shrinking. Their once-dominant position in the industry is no longer secure, and their influence is fading.
Japan and the U.S. Lead the Market
While German companies struggled, carmakers from Japan and the U.S. performed much better. They increased their revenue and profits, gaining a bigger share of the market. EY analyst Constantin Gall explained the reasons behind Germany’s decline.
“Last year, German luxury brands did well because they charged high prices,” Gall said. “But that advantage is slipping. Now, the market is driven by price, and Asian automakers are leading with affordable, tech-focused cars.”
Germany’s carmakers also face other challenges. The demand for electric vehicles (EVs) has not grown as fast as expected. Many companies have spent billions on EV technology, but they are not yet seeing strong profits from these investments. At the same time, they are dealing with product recalls, internal restructuring, and software issues.
Tariffs Add Pressure for German Carmakers
A new trade policy from the U.S. is adding to Germany’s troubles. President Donald Trump announced a 25% tariff on imported cars, starting in April. This is a serious problem for German automakers because the U.S. is their largest export market.
If these tariffs go into effect, they will make German cars more expensive for American buyers. This could lead to fewer sales, further cutting into the profits of BMW, Mercedes-Benz, and Volkswagen.
Challenges in China and Europe
The problems for German brands are not limited to the U.S. In China, one of the world’s biggest car markets, they face growing competition from local companies. Chinese carmakers are offering high-quality electric cars at lower prices, making it harder for German companies to compete.
Meanwhile, in Europe, economic growth is slowing down. High inflation and rising interest rates have made it more expensive for consumers to buy new cars. This has hurt sales for all automakers, but Germany’s car companies are feeling the impact more than others.
Cost-Cutting Alone Will Not Be Enough
To deal with these challenges, German carmakers have started cutting costs. Many have laid off workers, reduced expenses, and restructured their businesses. But Gall warns that this is not enough.
“You can’t save your way into the future,” he said. “Companies need new ideas and strong strategies.”
To stay competitive, Germany’s automakers must focus on long-term changes. They need to refine their brand image, speed up innovation, and find new ways to attract customers.
The road ahead will not be easy. But companies that are willing to adapt will have the best chance of surviving.