A recent survey by the German Automotive Industry Association (VDA) shows that Germany’s automotive small and medium-sized enterprises (SMEs) have a bleak outlook for the year 2025, with many companies struggling with economic underperformance and a challenging order situation.
The VDA’s findings show that half of Germany’s mid-sized automotive companies have not met their economic performance expectations for 2024.
A further 19% said their low forecasts had been met but not exceeded, highlighting the sector’s problems.
Only a small proportion of companies, 5%, reported that they exceeded their expectations, while a quarter believed that performance was as expected.
Looking ahead, the forecasts for 2025 are not promising: only 17% of companies surveyed expect an improvement.
About 45% predict no significant change, and 38% fear their economic situation will worsen.
The survey, which has been conducted since spring 2020, also shows that more than 65% of medium-sized automotive companies consider the order situation to be a major challenge.
The previously high order book has been eliminated, due to the impact of slow economic growth and a weak European car market on these companies.
Investment activity in Germany is particularly limited, with 69% of companies postponing, rescheduling or canceling planned investments.
The tendency to move investments abroad has decreased; 23% are considering this option, the lowest level since the survey began.
When the last survey was conducted in May 2024, this figure was 37%.
Preferred relocation destinations include Asia, the EU and North America.
More than half of companies in Germany are reducing their workforce, while 14% are hiring and 32% are maintaining stable employment levels.
In response to the economic climate, 69% of companies are implementing efficiency improvement programs, 59% are undergoing restructuring and 29% are considering diversification.
The VDA research highlights the need for less bureaucracy, with 92% of companies citing this as a top priority for the new European Commission.
Other concerns include improving competitiveness and relaxing reporting requirements, with 41% calling for financing programs tailored to SMEs.
VDA Chairman Hildegard Müller: “The supply industry and in particular the numerous medium-sized companies are a key factor for a successful transformation of the German automotive industry. However, weak demand combined with site conditions is becoming increasingly toxic, especially for mid-sized industrial companies.
