Market Situation and Challenges
The German industry is currently in a difficult phase:
- Sales Declines: Industries such as the rubber and plastics industry (–3.1% sales), textile and clothing industry, as well as mechanical engineering and automotive sector are particularly affected.
- Job Cuts: Leading companies have initiated cost-cutting programs, resulting in significant job reductions. The goal is to adjust capacities to the weak demand level.
- Export Dependency: Domestic demand remains weak (–1.1% sales in the first quarter of 2025), meaning the economy continues to be heavily reliant on exports.
Despite these challenges, many large corporations remain resilient. Experts like Brorhilker emphasize the historical resilience of Germany’s industrial base: “The industrial base of Germany has often been declared dead – and has repeatedly proved to be remarkably resilient thanks to its very strong substance.” However, conditions must improve – particularly through reducing bureaucracy, cutting costs, and strengthening domestic demand.
Opportunities for Market Leaders
Large corporations with a strong market position benefit from several advantages:
- Economies of Scale: They can reduce costs more efficiently than smaller competitors.
- Diversification: Many are internationally positioned (e.g., automotive industry) or have a wide product portfolio (chemicals).
- Dividend Stability: Despite declines in profits, many continue to pay attractive dividends (up to 3.44% yield).
Exemplary Industries
Automotive Industry
- Sales Losses in China: German car manufacturers recorded a ten percent drop in sales in China in the first quarter of 2025; China’s share of global total sales fell from 32.1% to 30.1%.
- Growth in the USA: In the USA, car sales of German companies rose by two percent – but less than US manufacturers (+5%) or Japanese manufacturers (+4%).
- Tariff Policy as a Risk: Uncertainty due to potential high US import tariffs additionally burdens margins.
Chemical Industry
BASF expects a maximum economic stagnation for Germany; however, international diversification helps mitigate risks.
Mechanical Engineering