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

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.