"Change of mentality and economic policy necessary to maintain growth and prosperity and achieve climate protection"

At the annual press conference of the Association of the Automotive Industry (VDA), VDA President Hildegard Müller called for comprehensive changes and reforms in view of the political decisions in Berlin and Brussels: "2025 must be the year of a new start in order to become the year of the turnaround. The year that marks the beginning of an urgently needed change in mentality and policy in order to make the location internationally competitive again and to guarantee growth, climate protection, prosperity and jobs," Müller said.

"The goal of our industry is clear: to offer the world's best digital and climate-neutral products for the mobility of the future," Müller emphasized, also referring to the unique and impressive global reputation of the brands of the German automotive industry. "If growth and prosperity are to be maintained, if respect for our economic power as a whole is to increase again, then an economic turnaround is inevitably needed now: For this we need an agenda for innovation, growth, reducing bureaucracy and jobs. No small steps, but a big successful action is necessary, politically and also socially - because this can only succeed if we work together."

Investments in the German automotive industry continue to grow

With regard to Germany and its decreasing international competitiveness, Müller explained: "It's about where the future of our industry will be at home. We are firmly determined to develop and export the future of mobility: from 2025 to 2029 alone, our companies will invest around €320bn in research and development. In addition, there will be around €220bn in capital expenditure, particularly in factories. This means that the investments of the German automotive industry will increase significantly once again."

What is alarming is that the majority of these investments are now due to German companies' commitments abroad: "This worrying development is all the more serious when you consider that around 70% of jobs in our industry in Germany depend on exports. This is a very big problem - with major, as yet unforeseeable consequences for many regions of Germany," Müller warned.

Calls for Berlin and Brussels

Germany as a location is no longer competitive internationally, as all international rankings and data surveys show: "When it comes to location and competitiveness, there is no problem of knowledge, but rather an implementation problem," Müller said.

Energy Costs: "Gas prices are three times higher than in China and even five times higher than in the USA. Electricity prices in Germany are also currently up to three times higher than in the USA or China, for example. This is a massive competitive disadvantage. Reforming grid charges can only be a start. To increase electricity generation, we need international energy partnerships and a capacity market that is open to all technologies and to new decentralized flexibilities such as storage and bidirectional electric vehicles. Electricity must become cheaper - also for consumers. It must be ensured that charging is cheaper than refueling," Müller demanded.

A strategic energy policy also means setting the course for the future now - and hydrogen will play a decisive role in the future. Unfortunately, however, not in this country if we do not rethink things, Müller warned: "It does not help to demand transformation and then tie it to conditions almost impossible to fulfill. Here, too, the necessary change in mentality is needed. Nowhere else in the world hydrogen generation is subject to more requirements than here. The current policy renders its own demands impossible."

Digitalization: "We do not only lack the necessary infrastructure in Germany, we also face a legislation at the German and European level that increasingly wants to define everything, regulate every individual case in advance and take every constellation into account. The result: Our companies in Germany and Europe are basically on hold all the time while other regions overtake us. It is a competitive disadvantage to want to regulate everything in advance. Here too, a change in mentality and policy is needed.

We also have very good foundations for the digital business models of the future. And one thing is certain: AI is a key technology in the automotive industry. That is why we are strongly calling for a practical and innovation-promoting implementation of the relevant laws, especially the AI Act. Then we can also put our solid foundation in AI into widespread use. In view of the diverse developments, the next government must develop a new edition of its AI strategy - and underpin it with concrete support measures so that we can become a leading AI location," Müller said.

Red tape and taxes

In international comparison, Germany is at the top when it comes to tax and bureaucracy. Germany is only ever in the first places when it comes to burdens, regulations and requirements.

"Our corporate tax is too high - no matter what the next federal government looks like, it must take action here," Müller said. She continued: "Anyone who is still talking about tax increases or additional tax burdens didn’t get the drama. That would send a completely wrong signal and would further endanger urgently needed investments as well as the preservation of value creation and jobs in Germany. Instead, what is needed is the complete abolition of the solidarity surcharge, better depreciation conditions, a more flexible loss statement and the introduction of an investment premium for investments in climate protection and digitalization."

In view of the increasing bureaucratic burden, it is not enough to just keep talking about reducing bureaucracy. "Concrete proposals are on the table. They must be implemented. And not just in Germany, but also in Brussels - this is where most of the new bureaucratic costs are now arising. Reducing bureaucracy is important, but avoiding new bureaucracy is just as important. There needs to be a stronger focus on making legislation as unbureaucratic as possible. Practical checks and digital checks of the measures should be introduced as mandatory elements of legislation in both Berlin and Brussels. And in addition, it is important to enable more personal responsibility by reducing reporting points," Müller said.

Focusing on medium-sized businesses

Small and medium-sized businesses in particular are increasingly suffering from the bureaucratic requirements: "Small and medium-sized businesses - the unique density of suppliers - are a key factor of our country's ability to innovate and of stable jobs. If we lose suppliers, we lose innovative strength. This is especially true, for example, with regard to the increasingly difficult financing conditions for small and medium-sized companies. Berlin is called upon to lobby Brussels for a corresponding adjustment of the EU taxonomy and banking regulation.

As with all issues, Germany needs a strong voice in Brussels to ensure that European legislation is low in bureaucracy and practical. And EU legal acts should always be implemented 1:1 into national law. We reject additional or upstream national legislation," Müller said. 

Dare to be more EU

With regard to the geopolitical changes and challenges, Müller demanded: "The motto is simple: dare to be more EU, expand our economic power together strategically, secure our international relevance against the backdrop of geopolitical changes. That means more cooperation, more strategically oriented and coordinated industrial and innovation policy. More pragmatism. And think about geopolitics and economic policy together. The following applies: more EU does not mean more bureaucracy and petty nitpicking. It is about the big questions," Müller said. Specifically, she called for a European energy and capital market union, a maximum of international partnerships (trade agreements, raw materials agreements, energy partnerships) and a strengthening of the European internal market.

Confidence through business-friendly policies

Müller expressed confidence that the economic turnaround can succeed: "Now we must seize the opportunity to return to a business-friendly, performance-oriented policy that promotes innovations 'Made in Germany'."

Germany has a huge wealth of skills and knowledge: "We have the best minds in the world in many areas, and we are often leaders in patents and innovations. We have the passion and creativity that is needed. We also have endless potential in new fields such as AI - especially in connection with our industry. We want to take advantage of this opportunity - and for that we now need political unleashing, in Berlin and Brussels," Müller said.

2025 Forecasts for market, production and export

During the press conference, VDA chief economist Dr. Manuel Kallweit also announced the most important forecasts for 2025: "For the German passenger car market, we expect a slight increase of 1% to a further 2.8mn units in 2025. That is about a quarter less than in the pre-crisis year of 2019.

The CO2 fleet regulation also requires a significant increase in new registrations of electric vehicles in Germany. We assume that around 873,000 electric cars will be newly registered in Germany in 2025. This corresponds to a sales increase of 53% compared to the previous year 2024. We forecast that purely battery-electric vehicles (BEV) will increase by around 75% to 666,000 units and plug-in hybrids (PHEV) by 8% to 207,000 units.

The markets in Europe (EU, EFTA & UK; +2%, 13.2mn units) and the USA (+2%, 16.2mn units) are expected to grow slightly faster in 2025 than the Chinese market (+1%, 23.2mn units) due to the still low market volume.

The VDA expects only a slight increase in domestic car production this year (+1% to 4.15mn units). One of the reasons for this is the overall economic weakness. Foreign production of German group brands is expected to increase by 2%, with the production of 9.7mn cars.

We expect a positive development in the domestic production of electric cars. This is likely to increase further in 2025, after a production record was already reached last year. We expect domestic production of electric cars to increase by 24% in 2025 (BEV: +30%, PHEV: +2%). Overall, 1.7mn electric cars are likely to be manufactured in Germany this year, and Germany will consolidate its position as the world's second largest production location for electric cars.

With regard to car exports, we expect a slight increase of 2% to 3.2mn units for the current year 2025. This corresponds to an export quota of 77%.

For 2025, we expect heavy commercial vehicles in Europe to decline by around 2% to 301,000 units. For the USA, we expect an increase of 7% to 257,000 units and for China, an increase of 3% to 929,000 units.

With 1,745 buses, almost a third of the 5,382 newly registered buses last year were powered by alternative drives. 713 buses alone (13.2%) were purely electric. Overall, the market declined by 2%. We expect a sideways movement (±0%) for the current year.

The economy in the trailer and body industry has been in reverse gear for some time. Both trailers overall (-2%) and heavy semi-trailers >6t (-11%) fell significantly last year. The registration level was therefore lower than in 2020, the economic low point of the COVID pandemic.