VDA President Regarding Coalition Agreement

"Germany needs a capable government as soon as possible – also to regain leadership in Europe in the face of many challenges and ensure international agency. The fact that the coalition partners have now agreed on a coalition agreement is therefore welcome.

The manifesto of the CDU/CSU and SPD sets the first important and correct priorities, but in some areas it falls short of the urgent needs - in particular, the financing reservations that run through many parts of the coalition agreement leave many questions unanswered.

Competitiveness and attractiveness as a location must be the guiding principles of the new German federal government - this is crucial for the future of Germany's key industry, the German automotive industry. Only then the coalition's goal of increasing the growth of the potential will truly be achieved. The establishment of a Germany Fund can make a positive contribution to improving access to capital - especially for investments by SMEs and scale-ups.

The commitment to the car, the clear guideline that Germany is an industrial nation and a country of medium-sized businesses, is the basis for a change in policy with which Berlin can leave behind the recently predominantly burdensome policy for the German engine of prosperity. This commitment is underpinned by key points in detail. A positive aspect is the focus on tax incentives to promote electric cars. The extension of the vehicle tax exemption for electric cars until 2035, the increase in the gross list price cap for company car tax, and the introduction of a special depreciation allowance are important impulses and support the ramp-up of e-mobility. The same applies to the planned general reduction of electricity tax to the European minimum, which is an important contribution to reducing charging prices.

A key element in this is a stronger focus on expanding the charging and hydrogen refueling infrastructure, both for cars and commercial vehicles; although this still needs to be further specified. Furthermore, the announcement of programs for lower-income households must be clarified as soon as possible, otherwise purchasing decisions will be postponed. The increase in the travel allowance is appropriate.

The clear commitment to technological openness still needs to be backed up with concrete results - especially with regard to upcoming decisions in Brussels regarding CO2 fleet regulations. The announced support for plug-in hybrid technology also requires swift clarification in this context.

The aim of promoting investment, innovation, and competition is fundamentally correct. The coalition promises to reduce taxes, levies, and energy prices, improve work incentives, support decarbonization, reduce bureaucracy, for example, by abolishing the national supply chain law, and pursue an active trade policy. Some of this commitment is backed up by concrete measures, while other parts remain mere declarations of intent. It is clear that much more work is still needed here.

It is welcome that the coalition has agreed to a reduction in electricity prices. Along with the reduction of the electricity tax to the European minimum and the permanent cap on grid charges, these points are an important signal, especially for small and medium-sized industrial enterprises. To incentivize the short-term construction of new gas-fired power plants and to introduce a technology-neutral, market-based capacity mechanism will be important decisions for the future of a secure and more competitive electricity supply. It is also right that the coalition realistically recognizes that Germany will remain an energy importing country - and urgently needs corresponding energy partnerships.

The ambitious goals to reduce red tape and costs are logical. Now it's time for actual and swift implementation. Small and medium-sized industrial enterprises in particular can no longer bear the current burdens.

The promise to enable efficient and effective digital administration via a central platform is also an important step toward modernizing our country and accelerating planning processes. Establishing Germany as a leading location for future digital technologies, especially in the field of AI, is a worthy goal, which of course must be backed up by concrete measures. It is right that this federal government emphasizes the aspect of data use and wants to advocate for an economic balance between data protection and data use. The new Federal Ministry for Digital Affairs can and must establish these processes as quickly as possible.

While the agreed move toward corporate tax reform is an important signal, its implementation as late as in 2028 and the continued unchanged solidarity surcharge fall short of the urgent need to immediately strengthen Germany's attractiveness to tax. Crucial factors will be the relief also reaching partnerships and that far-reaching plans for tax increases have been rejected. To support investments in this country, the agreed investment booster is a helpful tool that can provide appropriate investment incentives.

In light of the geopolitical shifts and challenges, the future coalition has committed itself to advocating for a pragmatic and rules-based trade policy, the rapid ratification of EU agreements, and the conclusion of further free trade agreements. These are crucial levers, especially for an export nation like Germany, where an acceleration is urgently needed. The proposed conclusion of a free trade agreement with the United States is a further positive signal. At the same time, relations with China must also be carefully managed.

Overall, the coalition agreement sets the right tone and provides the right impetus, but also fails to implement the necessary fundamental structural reforms in many areas. What's important now is that the intended projects are implemented quickly and easily, that the sometimes vague declarations of intent are backed up by concrete measures—including, for example, the reform of the social security system—and that the incoming federal government thus lays the foundation for enabling an economic turnaround and a corresponding spirit of optimism."