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German Election Unlikely To Provide Required Auto Industry Shakeup
The outcome of Germany’s general election is unlikely to bring about the significant changes required by the struggling auto industry, as no party has proposed a comprehensive plan to address its pressing issues.
Despite the uncertainty surrounding the formation of a new government, one thing is clear: the automotive sector in Germany will continue to face a daunting challenge. The country’s inability to provide necessary support and stimulus for the industry can be attributed to the election result, which did not yield any major surprises or disruptions.
The CDU/CSU coalition, which secured 33% of the seats in the Bundestag, has traditionally been pro-business and anti-bureaucracy. This stance might lead some investors to become more optimistic about the competitiveness of German manufacturers in the medium term. However, this optimism should be tempered by the fact that the industry’s challenges are global in nature and beyond the control of the next German government.
The loss of market share in China, the threat of Chinese imports into Europe, and the risk of US tariffs remain significant hurdles for German automakers. The outcome of this election does little to address these issues.
Furthermore, there is little hope of government funding being available to support the industry. Energy price stability and more competitive prices for energy-intensive industries are likely to remain the primary focus of the next government.
The election result may have some positive implications in terms of CO2 emissions rules. The CDU/CSU has been vocal in challenging these regulations, which would ban the sale of new gasoline and diesel-powered cars by 2035. Any concessions made by the EU Commission could provide some relief to the industry.
However, it’s unlikely that this outcome will lead to a significant stimulus package or major policy changes that could benefit the sector.
