Germany's External Trade Development: A Case of the German Automotive Industry

Germany's External Trade Development: A Case of the German Automotive Industry

Alexander Schülke (Boston University, USA), Pierre Haddad (Boston University, USA), Saerom Jang (Boston University, USA) and Melissa Renneckendorf (Boston University, USA)
Copyright: © 2017 |Pages: 13
DOI: 10.4018/978-1-5225-0902-8.ch008
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Abstract

The automobile industry is the single largest industry in Germany. Demand for German car brands in foreign countries, including China, is strong as German car manufacturers enjoy reputation of high quality products. In recent years, several factors showed an effect on Germany's external trade development through a shift in the automobile sector. Globalization had an effect on external trade as developing countries try to push many exporting countries, including Germany, to manufacture locally. This is an ongoing trend that is supported by lower labor costs in developing countries. Boosting other sectors is one strategy to be less dependent on these developments and the focus on electric vehicles could ensure further exports. Economic growth in foreign countries remains one of the big opportunities for Germany's external trade development. However, it is important to take potential challenges and barriers into consideration, including environmentalism, strong competition, and new trends and business models that lead to less car ownership.
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Analysis

The following paper is going to analyze Germany’s external trade development and current trade posture in the automotive sector. The approach is the following: at first, the effects of globalization on the German automotive industry and how the strategies of German car manufacturers changed in response will be analyzed. Such strategies are also known as internationalization strategies. Afterwards, the development of German car brands and their expansion to other countries is explored in greater detail. What follows is a comprehensive breakdown of the existing problems that the German automotive industry is currently facing with regard to exports. This will then be complemented by a description of trade policies that Germany goes by and how the German government has intervened in the market in the past. Such interventions can also stem from foreign countries. Lastly, the opportunities, challenges and barriers of German exports will be evaluated and finally a conclusion summarizes the findings and provides an outlook.

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