Germany's auto industry needs reform to secure global competitiveness, says VDA president

Mueller urged a shift in both policy and mindset to ensure Germany's economic growth, climate goals and job security.

BERLIN, Jan. 21 (Xinhua) -- Germany's automotive industry is grappling with critical challenges and needs substantial reform to retain its international competitiveness, according to Hildegard Mueller, president of the German Association of the Automotive Industry (VDA).

Speaking at the VDA's annual press conference, Mueller stressed that 2025 must serve as a crucial turning point for change, urging a shift in both policy and mindset to ensure Germany's economic growth, climate objectives, and job security.

"The goal is clear, to produce the best digital and climate-neutral mobility products in the world," Mueller stated, emphasizing the global prestige of German automotive brands.

Mueller called for a bold agenda centered on innovation, growth, reduced bureaucracy, and job creation, cautioning that incremental measures would be inadequate.

From 2025 to 2029, German automotive companies are projected to invest approximately 320 billion euros (329.6 billion U.S. dollars) in research and development, along with 220 billion euros in plants and equipment. However, Mueller noted a concerning trend: a growing share of these investments is flowing abroad, endangering Germany's domestic economy, where 70 percent of automotive jobs rely on exports.

She highlighted the urgent necessity of lower energy costs, pointing out that Germany's electricity and gas prices are higher than those in China and the United States, placing German companies at a competitive disadvantage.

Mueller also called for an overhaul of Germany's hydrogen policy, citing excessive regulations that hinder the development of this vital technology.

On the digitalization front, Mueller stressed that Germany's infrastructure and regulatory environment are lagging behind global competitors. She called for faster, more flexible decision-making, particularly with regard to artificial intelligence, which she identified as a key technology for the automotive sector.

Furthermore, Mueller criticized the high tax and bureaucratic burden on businesses, advocating for the abolition of the solidarity surcharge, improved depreciation rules, and streamlined bureaucracy, particularly at the EU level.

Looking ahead, the VDA projected modest growth in the German passenger car market, with sales expected to rise by 1 percent to 2.8 million units - still 25 percent below the pre-crisis levels in 2019. Meanwhile, electric vehicle (EV) registrations are expected to increase by 53 percent to 873,000 units, with domestic production of EVs to rise by 24 percent, helping Germany maintain its position as the world's second-largest EV producer.

Mueller expressed optimism about Germany's ability to regain its competitive edge with the right policies. "Germany has the talent, innovation, and potential to lead, especially in fields like AI. What is needed now is political action to unlock this potential," she said. (1 euro = 1.03 U.S. dollar) ■