German government invites car industry stakeholders to discuss sector's crisis

Germany's economy ministry has invited stakeholders to a car industry summit to discuss the current industry crisis, Spiegel reported. Representatives of the country's carmakers, the German Association of the Automotive Industry (VDA) and the IG Metall union will join the talks on Monday 23 September in Berlin, according to the report. The government is currently weighing options to counter the continuing weakness in electric car sales, unnamed officials told newswire Reuters.

German manufacturers are struggling with weak sales figures and the high costs of switching to electric vehicles. As a result, auto companies are seeing profits melt away: Volkswagen reported a 14 percent drop in profit in the first half of the year, BMW's profits fell by almost 15 percent, and Mercedes-Benz's by almost 16 percent. The crisis has also reached automotive suppliers. Sales of electric cars in Germany collapsed after the government halted subsidies to incentivise car purchases. 

Hit particularly hard by the industry crisis, VW recently terminated a job security agreement with unions in Germany that has been in place for decades, making factory closures and redundancies a possibility. Germany’s federal and state governments are currently considering ways of supporting VW, Habeck said during a visit to the VW plant in the Lower Saxony city of Emden on 20 September, where he mentioned the government’s plan to create tax incentives for electric company cars. He added it remains to be seen whether further support was possible, public broadcaster NDR reported.

One in five German company fleet cars in 2023 were electric. Around half of them were pure battery-electric vehicles (BEV) and the other half plug-in hybrids, according to a recent report.