VDA President Hildegard Müller made it clear at the annual press conference of the German Association of the Automotive Industry (VDA) that a comprehensive reform program for location attractiveness and competitiveness is a key prerequisite for an economic turnaround.

While initial real momentum is being generated in Berlin, Müller increasingly lacks understanding for the approach of the EU Commission in Brussels: "Too often, Brussels is confronting businesses with a combination of denial of reality and an illusion of relevance. There is no longer any doubt that without economic strength, Europe has no international significance or power to assert itself—but the EU Commission in particular has not yet internalized this fact."

Europe's weakness is being observed and exploited

Müller further emphasized: "Whether in Berlin or Brussels, we too often remain mired in very concrete descriptions of complex challenges—without actually addressing the problem-solving. But reality keeps catching up with us. Whether in tariff negotiations with the USA, in competition with China and other regions, or in Davos: We, Europe and Germany, are increasingly being shown that our model, our way of regulating transformation through central planning, is not a successful model. On the contrary: It is an invitation to others, to our competitors, to fill the gaps that Europe leaves behind due to its lack of attractiveness as a business location. This allows them to achieve a leading position, grow economically, and profit from our weakness. This is a dangerous weakness that ultimately leads to the loss of jobs and prosperity. Figures, data, and statistics confirm this finding."

Our country's potential is greater than its challenges

Even though the tasks in Europe and Germany are enormous, Müller emphasized: "This country’s potential, its innovative capacity, its performance, and the commitment of so many people here are unique and absolutely put us in a position to set global standards. The crucial thing is to create the right incentives, to promote and challenge our strengths, and to identify and overcome our weaknesses. The fact is, Germany possesses unique strengths: highly qualified specialists, impressive innovative power, high industrial competence, renowned research, a strong SME sector, and global networking. Now it’s about unleashing these strengths again. Crucial to this is also a renewed sense of trust as a response to excessive regulation characterized by mistrust. This applies particularly with regard to the EU."

With regard to the Automotive Package, which is still being negotiated in Brussels, Müller stated: "Germany must now strongly advocate that the announced technological opening from Brussels is not only promised but also practically implemented. The principle must be: away from obligations and penalties and towards market-based incentives. As an automotive nation, we cannot be satisfied with the current proposals at all." Instead of lip service, concrete action is needed: "A reduction of CO₂ emissions, supposedly to minus 90%, which is simultaneously linked to conditions and new requirements, offers no relief and provides no planning certainty whatsoever."

Real reforms require new culture of debate

Müller argues that the way proposals and ideas are handled is particularly problematic for real change and profound reforms: "We are all increasingly experiencing an inability to debate, and worse still: often, proposals are deliberately misunderstood, and attempts are made to exploit this for political gain. This deliberate misunderstanding was once a tool of populists, but now it is an increasingly common tactic, fueled by social media algorithms. This principle is thus becoming a blocker to reforms and change.

In other words, without a different kind of debate culture, we will not be able to master the necessary reforms and societal changes. The same principle applies here as always: reforms ensure future viability. And social security is only sustainable if it remains affordable and effective. Therefore, reforms are essential to preserve jobs and prosperity and to make the country fit for the future.

A change in mentality, a different culture of debate, and the courage to make decisions are essential prerequisites for the necessary comprehensive reform program."

Results of VDA survey: Investment activity in Germany remains weak

At the annual press conference, VDA Chief Economist Dr. Manuel Kallweit presented the results of a survey that the VDA regularly conducts among automotive suppliers (Manufacturer Group III) and medium-sized manufacturers of trailers, bodies, and buses (Manufacturer Group II).* The survey shows, among other things, that investment intentions in Germany are weak. 72% of the companies intend to postpone, relocate, or completely cancel planned investments in Germany. Specifically: 28% plan to relocate investments abroad, 19% to cancel them, and 25% to postpone their investments.

Investment patterns reveal a geographical shift: While one in three companies plans to reduce its investments in the EU (33%), this applies to only 3% of companies in the USA and only 5% in China. Conversely, 18% intend to expand their investments in the EU, compared to higher figures for China (22%) and the USA (28%).

Following the investments, employment will also be relocated

This underscores once again that Germany and Europe as industrial locations are under pressure. This also has an impact on employment. Last year, 2025, around two-thirds (64%) of the companies surveyed reduced their workforce in Germany. For 87% of them, the lack of competitiveness of Germany as an industrial location played a major or even very major role.

And a current view also reveals the shifts that are taking place: Around half of all companies (49%) are currently reducing their workforce in Germany. For 46% of companies, the number of employees in Germany remains constant, while only 5% are increasing their workforce.

The survey results clearly show that the challenging situation in Germany is leading to the relocation of jobs abroad: Of the companies that are cutting jobs in Germany, almost half (49%) are simultaneously creating jobs abroad. A further 38% of companies that are cutting jobs in Germany are keeping their employment levels abroad constant. Only 13% of companies that are cutting jobs in Germany are also doing so abroad.

This also means that only 6% of the companies surveyed are reducing employment both in Germany and abroad. However, one in four companies (24%) that participated in the survey are reducing staff in Germany and increasing staff abroad. And while, as mentioned above, almost half are reducing employment in Germany, only 7% are also reducing staff abroad. Not a single company is relocating operations from abroad to Germany.

VDA President Hildegard Müller: "This data demonstrates one thing once again: This is not about an industrial crisis, but rather, it is undeniable that Germany is facing a massive economic location crisis. Conditions in Germany and Europe are deteriorating rapidly. This is putting companies under pressure, especially small and medium-sized automotive businesses.

In these times, companies are unfortunately forced to make daily decisions against Germany and Europe as business locations for economic reasons. It is clear: the migration of investments and jobs will not be without consequences for the prosperity of our country and for its social and political stability. This realization is painful—which makes it all the more important that the right conclusions are drawn from it. This means: everything that creates growth must have top priority in Brussels and Berlin. It is also true that isolationism will backfire. Every attempt to isolate Germany as a business location harms the interests of the export-oriented German automotive industry and the employees in Germany."

*The survey was conducted from January 11th to 25th. 124 companies participated. This provides the VDA with reliable data on the current situation and prospects of the automotive industry. The VDA has been conducting this survey regularly since spring 2020.