VDA survey: 9 out of 10 companies consider Germany to be internationally uncompetitive as a business location

Around 9 out of 10 companies (88%) consider Germany to be internationally uncompetitive in terms of energy costs, labor and tax burden. This is shown by a current survey by the German Association of the Automotive Industry (VDA) among automotive suppliers (manufacturer group III) and medium-sized manufacturers of trailers, bodies and buses (manufacturer group II), which was conducted from January 23 to February 3, 2023. 116 companies took part in the survey. This means that the VDA has representative statements on the current situation and prospects for the automotive industry.

The dissatisfaction with the location apparently also has a clear impact on investment intentions: In a survey from July last year, 56% of the companies surveyed said they wanted to postpone their investments, in another survey in September it was 45%. In the current survey, only 28% now state that they plan to do so - but the proportion of companies that are relocating their investments abroad or want to cancel them entirely is increasing: According to the current survey results, 28% are planning to relocate investments abroad ( September 2022: 22%) and 14% to cancel their investments (September 2022: 9%). Only 2% of the companies in the current survey state that they want to increase their investments in Germany concerning the current situation – 1% less than in September last year.

VDA President Hildegard Müller: "More and more companies consider Germany to be uncompetitive internationally, which is no good evidence of German industrial policy. The result once again shows that we urgently need an ambitious program to promote Germany as an industrial location: less red tape, more trade agreements, a competitive tax system, simpler and faster planning and approval processes. In addition, our energy and raw material supplies must be secured with international partnerships if we want to make Germany and Europe more independent. With all this, politicians need more speed and determination. Otherwise we are increasingly in danger of falling behind internationally."

The survey shows: The high electricity price is currently the greatest challenge for the automotive supply industry and small and medium-sized automotive companies in Germany. Around 82% of the companies surveyed state that they are heavily or even very heavily burdened by the high electricity prices. 3 out of 4 companies are severely or even very severely (73.3%) challenged by the high gas prices. Except for the price of electricity, companies are currently only being burdened more heavily by the shortage of workers and skilled workers. 77.6% suffer from it severely or even very severely. In addition, 62% of the companies state that they are heavily or very heavily burdened by red tape. This is also reflected in the feedback from companies on the gas and electricity price caps currently being implemented: 36% rated the caps as helpful or very helpful, but 39% considered them to be of little help or not at all. In addition, more than every 5th company states that they are not yet able to judge whether these instruments are helpful for them.

VDA President Hildegard Müller: "It’s increasingly harder to navigate the bureaucratic jungle for companies in the German automotive industry, especially medium-sized companies. Due to the bureaucracy of the gas and electricity price caps many of them now have to get external advice - without knowing whether it is even helpful in each situation and applicable to their company. This cannot be allowed. Companies need all their strength to master the transformation and to set up their operations for the future - despite the crises. An easy and streamlined design of aid instruments is all the more important."

Müller continues: "Our survey once again shows that energy costs have to be cut down. To do so, the supply side must be expanded nationally as much as possible, energy partnerships must be concluded with other countries and, for example, the electricity tax must be reduced to the European minimum."

With regard to the procurement of materials, commodities and preliminary products, 42% of the companies see an improvement in the situation compared to autumn 2022. A good half of the companies (51%) state that the situation has not changed significantly. For a good 1 in 10 companies (12%), the situation has worsened since autumn.