German auto suppliers rely on an investment brake due to global uncertainties.

Better Wait! Many Automotive Suppliers are Delaying Investments

2025-05-26 Source: dpa | Translated by AI 1 min Reading Time

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The weak economy and global uncertainties prompted German auto suppliers to hit the investment brakes, reports dpa.

Car sales in Europe are stagnating. Suppliers automatically feel this. A recent industry survey reveals how low the willingness to invest is among auto suppliers and what other reasons are behind it.(Image: Brezinov) — Car sales in Europe are stagnating. Suppliers automatically feel this. A recent industry survey reveals how low the willingness to invest is among auto suppliers and what other reasons are behind it.
(Image: Brezinov)

According to a survey by the German Association of the Automotive Industry (VDA), most suppliers (76 percent) intend to postpone, relocate abroad, or completely cancel investments originally planned in Germany. Compared to the two previous surveys (February 2025 and October 2024), the figure has increased for the second time in a row. While in the February survey, 14 percent of companies wanted to completely cancel planned investments, in the current survey, it is already 20 percent. However, only 24 percent now plan to relocate abroad—five percent less than in February.

Poor Sales in Europe Curb Willingness to Invest

These numbers are alarming, commented VDA president Hildegard Müller on the result. She cited increasing international competition, geopolitical uncertainties, US tariff policy, and poor location conditions in Germany as reasons for the reluctance. Consequently, the political pressure to act is now high. For the companies surveyed, the triggers for the negative investment behavior are primarily weak sales expectations in Europe (58 percent), high production costs in Germany (16 percent), and, as it is said, difficult financing conditions (15 percent). Around 69 percent of respondents also reported reluctance from their domestic banks when it comes to loans.

Relatively few Believe in a Quick Improvement

For the study, 136 companies in the automotive SME sector were surveyed by mid-May—mainly suppliers, as well as manufacturers of trailers, bodies, and buses. Around 42 percent of them rated the current situation as poor. At least 31 percent expect an improvement in the next twelve months, while 26 percent anticipate a further deterioration.

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