How Does the German Auto Industry Work?

June, 2021

Ever since Carl Friedrich Benz invented the world’s first internal-combustion engine automobile in 1885, the car industry has been integral to the German economy. From major manufacturers to the hundreds of smaller companies that supply them with parts and materials, the sector employs nearly a million people and represents one-tenth of Germany’s GDP. The transition to electric vehicles (EVs) has the potential to hit smaller suppliers particularly hard, because EVs use many fewer moving parts than combustion engines.

Behind the Big Three (Volkswagen, Daimler, BMW) are more than 500 SMEs that produce parts and accessories from timing belts to batteries and airbags. Industrial giants like Bosch, Continental and ZF Friedrichshafen also supply the auto industry.

In 2018, the German auto industry generated EUR 426 billion in sales, represented 40 percent of Germany’s R&D expenditure and employed 834,000 people.

Source: CAM Electromobility Report 2020

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