The German automotive industry is bleeding billions: Worst result in 16 years

The major German car manufacturers are experiencing their worst quarter in 16 years.

Despite stable sales figures, earnings have plummeted due to high electric car investments and a declining Chinese market.

The German automotive industry has been hit hard.

In the third quarter of 2025, total earnings before interest and tax (EBIT) for German car manufacturers fell by almost 76 percent.

This is according to a new analysis from the consulting firm EY.

Although sales and revenue at manufacturers such as BMW, Mercedes-Benz and Volkswagen remained more or less unchanged, the financial result is the lowest since the financial crisis in 2009.

The total profit amounted to EUR 1.7 billion – equivalent to approximately DKK 12.7 billion.

German industry hit harder than competitors

According to EY, no other major car-producing country has experienced such a sharp decline in earnings and growth.

Globally, EBIT for the 19 largest car manufacturers fell by 37 percent to a total of EUR 18.9 billion.

At the same time, total sales rose to €531 billion, underlining the fact that Germany’s automotive industry is under particular pressure.

– “But at the moment, it’s the German car manufacturers that are particularly hard hit,” says Constantin Gall, automotive expert at EY, to NTB.

According to EY, the downturn is due to several interacting factors.

These include falling demand in the premium segment, high costs for electric car development, exchange rate fluctuations and US customs policy.

Downturn in China and transition to electric cars puts pressure on the economy

The Chinese market is a key factor for German car manufacturers, where sales fell by 9 percent in the third quarter.

EY describes the situation as a “perfect storm” for the German automotive industry, where large investments in electric cars have not yet yielded the desired returns.

At the same time, the market is being squeezed by increasing competition from Chinese car brands offering cheaper electric cars.

Tesla continues to play a dominant role internationally, further increasing the pressure on German manufacturers.

The German automotive industry has historically been among the world’s most profitable, but the current drop in earnings calls into question whether the industry can maintain its position in the future.

EY warns that the ability to make the electric car venture financially sustainable quickly will be crucial.