A Tough 2025 for Thuringia's Autos and Machinery
Struggles persist within the automotive and mechanical engineering sectors - Industries specializing in automotive and mechanical engineering persistently experience downward trends.
Thuringia's industrial sector kicked off 2025 on a high note, raking in a total revenue of around 9.5 billion euros, marking a 4.6% increase from the previous year. But hidden beneath this positive outlook, the automotive industry and machinery manufacturing sectors are stumbling, these two critical sectors having faced difficulties throughout 2024 as well.
In the domestic market, a revenue boost of 3.9 percent was recorded, amounting to 5.9 billion euros. Exports, however, witness a more noticeable growth of 5.7 percent, totaling 3.6 billion euros, accounting for over a third (37.6%) of Thuringia's industrial turnover.
Despite the positive gains in other sectors, Thuringia's machinery manufacturers and automotive industries suffered substantial losses, with revenue of machinery manufacturers dropping by more than one-fifth, and the automotive industry registering a decline of around 11 percent. Consequently, the employment landscape took a hit, with nearly 3,000 fewer workers in the sector, averaging 141,000 employees between January and March.
The Root of the Problem
The struggles of these sectors are intertwined with a myriad of global and local issues:
- Trade Tensions and Tariffs: The relationship between Germany's economy, particularly its export-oriented sectors like automotive and machinery, and the United States, its largest trading partner, is fraught with tension due to trade policies and tariffs imposed by the US. These tariffs have made German exports more expensive, causing economic turmoil in critical industries[4].
- Loss of Leadership and Global Competition: Germany, once a dominating force in automotive manufacturing, is losing ground to international competitors. The industry's reeling performance is linked with a need to adapt to new technologies, market trends, and intense global competition[5].
- Energy and Climate Challenges: Germany's drive toward renewable energy and the phasing out of fossil fuels has resulted in higher energy costs for energy-intensive industries like machinery and automotive, diminishing their competitiveness and profitability[4].
- Budget Constraints and Government Priorities: Shifts in government priorities and mounting social spending obligations have strained public finances, potentially impacting the support and investment available to traditional industries like automotive and machinery[5].
- Workforce Challenges: Germany's low birthrate and shrinking workforce pose long-term threats to productivity and growth potential in regions like Thuringia[4].
In a broader economic landscape that shines favorably, these specific challenges continue to hamper the economic vibrancy of Thuringia's automotive and machinery sectors, placing them in a difficult position amid external trade pressures, rising energy costs, shifting government priorities, and structural workforce issues.
- The ongoing struggles of Thuringia's automotive and machinery sectors are rooted in a variety of factors, including trade tensions and tariffs with the United States, which have made their exports more expensive.
- In addition, Germany's loss of leadership in the global automotive manufacturing industry is linked to the need to adapt to new technologies, market trends, and intense global competition.
- Energy costs for energy-intensive industries like machinery and automotive have risen due to Germany's drive toward renewable energy, potentially diminishing their competitiveness and profitability.
