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Cutting bureaucracy as a priority: automotive suppliers call for better investment conditions
Investment activity in Germany remains weak. More and more companies in the automotive SME sector are postponing or canceling planned investments. High labor costs and regulatory hurdles are a particular burden on the location. At the same time, the USA's customs policy is causing uncertainty in the industry. These are the key findings of a recent VDA survey of automotive suppliers and manufacturers of trailers, bodies and buses.
Reluctance to invest continues to increase
75% of the companies surveyed stated that they would postpone planned investments in Germany, relocate them abroad or cancel them altogether. Compared to the previous survey in October 2024 (69%), this proportion has risen significantly. Particularly worrying: 29% of companies are specifically planning to relocate investments abroad (October 2024: 23%). At the same time, only 1% of companies intend to expand their investments in Germany.
The main reasons for the reluctance to invest are the high labor costs (58%) and the subdued sales prospects on the German and European automotive market (56%). Expansion investments in particular are not considered necessary, as market growth is taking place in other regions.
2025: More companies expect a deterioration
The economic situation remains challenging. While 17% of companies still expected their business activities to improve in 2025 in October 2024, this figure is now down to 13%. At the same time, 43% expect their economic development to deteriorate, while 45% expect their business situation to stagnate.
Bureaucracy remains the biggest problem
90% of companies see bureaucracy as a heavy or very heavy burden. It also hinders investment activity: 50 percent of companies see the density of regulation as a concrete obstacle to investment.
VDA President Hildegard Müller is therefore calling for decisive action:
"When it comes to bureaucracy, the burden and pain threshold has long since been exceeded for the supplier industry and in particular for the numerous medium-sized companies in the German automotive industry - this cannot and must not continue. Genuine, consistent bureaucracy reduction must be at the top of the agenda of a new German government. What is important here is that measures to reduce bureaucracy must take much greater account of the backbone of our industry, the industrial SME sector. If the future German government does not take countermeasures when it comes to bureaucracy, there is a growing risk that medium-sized automotive companies will have to turn even further away from Germany as a business location - with correspondingly negative consequences for growth, prosperity and employment."
Energy prices remain a massive locational disadvantage
Other key demands from the industry include a reduction in reporting obligations (78%), a reduction in labor costs (69%) and a reduction in taxes and levies (65%).
Müller emphasizes: "While international competition between locations is becoming increasingly fierce and geopolitical pressure continues to grow, the competitiveness of Germany as a business location is eroding - this is having a noticeable impact on SMEs in particular. However, the challenging situation has remained politically inconsequential for far too long. The program of a new federal government and the coalition negotiations must therefore be based on this: We need an ambitious program for location attractiveness and competitiveness with concrete reforms. In view of the rapidly changing world situation and diverse global challenges, politicians in Berlin must focus on everything that creates growth. After all, economic strength is the foundation and basis for overcoming the diverse global challenges and surviving in the long term."
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The tense geopolitical situation is also reflected in companies' concerns: 86% of the companies surveyed believe that the latest US tariff policy will have an impact on their business. Of these, 54% expect indirect effects via suppliers and customers, while 32% see themselves directly affected.
57% of affected companies expect negative effects on turnover and profits. 25% fear disruptions in supply chains, while 17% are considering relocating their own sites and production capacities in response.
Job cuts continue to increase
41% of companies are currently reporting a shortage of skilled and unskilled workers. Despite a slight increase compared to October 2024 (37%), the figure remains well below previous highs - in spring 2023, it was still at 85%.
The ongoing reduction in employment is a cause for concern: 56% of companies are currently cutting jobs in Germany (October 2024: 54%). Only 11% are currently hiring new employees.
*The survey was conducted from February 11 to 26. A total of 150 companies took part. This provides the VDA with representative statements on the current situation and prospects of the automotive industry.
