German auto industry in free fall: The production of German cars is collapsing.

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The production of the German car industry falls dramatically. This has an impact on the whole of Europe, as the German economy is weakening. In July, the German auto industry recorded a 9.4% decline in production, according to the Federal Statistical Office. The Financial Times warns of a bleak outlook for the industry and its impact on the whole of Europe (berliner-zeitung: 07.09.23).

German economy facing turbulence: car industry in a nosedive – climate measures burden

The poor figures in the automotive industry are putting a strain on the entire German economy. Production fell by 0.8% month-on-month. On a year-on-year basis, there was a decline of 2.1%.

Three leading economic research institutes are therefore forecasting a decline in the German economy of 2023.0 to 4.0% and high inflation of six percent for 6.

The negative development in Germany is therefore also influencing the economy in the eurozone.

The European Statistical Office has lowered its growth forecast for the second quarter to a meager 0.1%. Countries such as Austria and Italy, which are strongly represented in the automotive supply sector, are particularly affected. The RWI-Leibniz Institute for Economic Research expects gross domestic product (GDP) to decline by 0.6% this year.

German economy facing turbulence: German auto industry in a nosedive – production falls by 9 percent – climate measures burden

The situation remains tense for the German automotive industry, not only because of competition from China. Within the EU, tougher measures are being taken against climate change. These now have a protectionist character. Major British bank HSBS reports that France will introduce a tax on heavy cars, especially SUVs, next year.

France’s SUV tax threatens German carmakers: 3500 euros extra per car

However, the tax only applies to models weighing 1.6 tonnes or more, which mainly affects German carmakers.

Individual cities such as Paris and Lyon are also planning even higher parking fees for cars that are too heavy. HSBC warns: “The SUV tax could reduce sales of German automakers in France. With a weight surplus of 350 kilograms, an additional 3500 euros are incurred.”

France currently offers good conditions for its automakers. Stellantis, one of the largest automakers, posted a 37% increase in net profit to 10.92 billion euros in the first half of the year. Stellantis, which represents brands such as Peugeot, Opel and Maserati, is confident that it can manage the upcoming costs of transforming into a carbon-neutral company.