Crisis Unaffects Group's Profitability
German Economy: Struggles in the Auto and Chemical Industries
In 2025, the German economy is facing challenges in two key sectors: the automobile and chemical industries. The former is grappling with significant profit declines, while the latter is dealing with increased costs due to strict climate policies.
The German automobile industry is currently experiencing a tough period, with major players such as Audi, Mercedes-Benz, BMW, and Volkswagen reporting steep profit drops and revenue reductions. For instance, Audi has lowered its 2025 revenue forecast to €65-70 billion, and saw a 37% profit after tax decline in the first half of the year due to restructuring and tariffs[1]. Mercedes-Benz profits halved in the same period, dropping from €6.1 billion to €2.7 billion, affected by tariff turmoil and slowing sales in China[3]. BMW's revenue and net profit fell by 8.2% and 29% respectively, citing tariffs as a major margin pressure[5]. Volkswagen's sales revenue slightly declined, with its Porsche brand facing around €400 million in tariff costs[5].
Key factors affecting the profitability of the German automobile industry include US import tariffs, restructuring and cost-cutting efforts, softening demand in major markets, and global trade instability. The US government imposed tariffs as high as 25%, recently lowered to 15% by a new EU-US trade deal, yet these still raise export costs significantly[1][5]. Companies are incurring expenses to adapt their organizations amid market shifts and trade uncertainties[1][3]. Declines in sales in Europe (outside Germany) and China are eroding revenues[1][3]. Supply chain disruptions and geopolitical tensions influence material costs and logistics[2].
Regarding the chemical industry in Germany, while no direct search results detailed its current profitability, Germany faces higher adjustment and abatement costs compared to other EU countries due to ambitious emissions reduction targets pointing to increased energy and operational costs under climate policies[4]. Given that energy costs are crucial for chemical producers, higher costs likely pressure profitability, especially in a global market where competition is affected by varying environmental regulations.
Industrial giants like Bosch, ZF Group, Mahle, Schaeffler, and Continental are shutting down plants and cutting jobs, with IG Metall reporting that suppliers have cut around 50,000 jobs since 2019.
In summary, the German automobile industry is struggling mainly due to trade tariffs and restructuring amid volatile global markets, while the chemical sector is likely challenged by rising energy and climate compliance costs impacting global competitiveness.
| Industry | Current Profitability Status | Key Factors Affecting Profitability | |-----------------|------------------------------------------------------------|--------------------------------------------------------------------------------------| | Automobile | Profits declining significantly; revenue under pressure | US tariffs (15-25%), restructuring costs, weakening demand in Europe and China, supply chain issues | | Chemical | Facing high adjustment costs from emissions targets | Increased energy/abatement costs under Germany's stringent climate policies, global competition |
[1] Reuters: Audi lowers 2025 revenue forecast as profit tumbles [2] Deutsche Welle: German car industry struggles with supply chain problems [3] Bloomberg: Mercedes-Benz Profit Halves as Electric-Car Transition Weighs [4] European Commission: Industrial Emissions Directive [5] Automotive News Europe: BMW, Daimler, Volkswagen report lower profits in Q2
The German automobile industry is currently grappling with significant profit declines and revenue reductions, with factors such as US import tariffs, restructuring costs, softening demand in Europe and China, and supply chain disruptions contributing to its struggles. On the other hand, the chemical sector in Germany is facing increased costs due to stringent climate policies, which may pressure its profitability in a global market with varying environmental regulations.
Industrial giants like Bosch, ZF Group, Mahle, Schaeffler, and Continental are facing challenges in the chemical sector, with high adjustment costs from emissions targets and the need for increased energy and operational costs under these policies potentially impacting their profitability and global competitiveness. Meanwhile, the German automobile industry is seeing job losses, with suppliers reporting around 50,000 job cuts since 2019.
