2024全球汽车展望报告：在湍流中转向-2024-05-市场解读

21March2024

04

08

18

Speedbumpsonthe

Europeanautomakers

ChineseEVstoconquer

roadtoelectrification

arelosingground

theglobalmarket

26

ChallengesandpoliticaluncertaintiesforUSEVs

AllianzResearch

Globalautooutlook:

Steeringthroughturbulence

AllianzResearch

2

Executive

Summary

AnoKuhanathan

HeadofCorporateResearch

ano.kuhanathan@

JasminGröschl

SeniorEconomistforEuropejasmin.groeschl

@

MariaLatorre

SectorAdvisorB2B

maria.latorre@

MaximeLemerle

LeadAdvisor,InsolvencyResearch

maxime.lemerle@

YaoLu

SectorAdvisor

yao.lu@

•Theautomotivemarketisexpectedtonormalizethisyear.Ontheonehand,weexpectcarregistrationstoslowdownfollowinga

strongreboundin2023.Ontheotherhand,carmanufacturersfacereducedpricingpowerandcontractingmarginsamidintensified

competitionandanuncertainenvironment.Weexpectnew

autosalestogrowby+1.9%thisyearduetosubduedconsumer

spending–especiallyinChinaandEurope–andsub-parglobal

economicgrowth.EVsremaininarelativesweetspotdespitemajorheadwinds.WeforecastthesaleofnewEVpassengercarstoexceed18mn(+32.8%y/y)in2024,withEuropeleadingtheway(+41.2%).

Ontheproductionside,weanticipateadeclineingrossandEBITmarginsto18.7%(-28pps)and5.2%(-164pps),andanacceleratedconsolidation.TheexpecteduptickintheR&Dratio(4.5%,+14pps)

andCapEx-to-salesratios(5.4%,+33pps)showsthatautomakersarelikelytodiversifytheirinvestmentsandstayagile.Theindustryispoisedtoseeariseinintra-regionalcollaborationamong

automakersandstakeholdersacrossthesupplychaintogainanedgeinthereshuffling.

•Moreimportantly,theglobalautoindustryisgoingthrougha

significanttransformationtowardselectricvehicles(EVs)butthepathaheadwillbeturbulent,shapedbygeopoliticaltensions,

slowingdemandandregulatoryuncertainties.Regionally,

thetectonicshifthasalreadystarted.TheChinahasrisenasadisruptiveforce,challengingtraditionalautoleaders.EuropeandtheUS,waryoftheirdependenceonChinesecomponentsand

theimpactonlocalindustries,haverespondedwithincreased

tradebarriersandscrutiny.TherecentdecelerationinEVdemand,

coupledwiththeuncertainregulatoryandeconomicclimate,furthercomplicatestheindustry’snear-termtrajectory.Welookintoregionalspecificitiesbelow.

•First,EuropeanautomakersandespeciallyGermanonesare

losingground.Thecarindustryhasbeenthebackboneofthe

Europeaneconomy(6%ofregionaloutput),servingasaninnovation(32%ofEU’sR&D)andexporthub(2.8%ofEU’sexportvalue)whileemployingavastworkforce(6.5mndirectemployment).However,

havinglongfocusedontheirestablishedstrengths,European

autoincumbentsarrivedlatetotheEVgameandarestruggling

toproduceaffordablemodelsprofitably(EVsstillcost27%more

thangasolinecars).Consequently,Europeanautomakersare

experiencinganotabledeclineinmarketshare.Thetransformationhasalreadyhadvisibleimpactsonthebusinesslandscapeinterms

21March2024

3

ofinsolvencies(+13%in2023)andemployment,putting730,000

jobsatrisk,withGermanybeingespeciallyaffected.Tocatchupinthenewraceandboostmarketuptake,Europeshouldprovidemorecarrotsthansticksandtakeimmediateactionsonbuildingupan

eco-systemaroundtheEVproduction.

•Second,ChineseEVsareoncoursetoconquertheglobalmarketyettheyfaceformidablehurdles.ChineseEVshaverisenat

anastonishingpace,withsalesandproductionjumpingalmost

eightfoldfrom2019to2023.GovernmentsupportplaysacriticalroleinestablishingChina’sundisputeddominanceintheindustrytoday.ChineseEVmakershavestrongcostadvantagesthankstotheir

early-moverposition,lowerlaborcostsandeconomiesofscale,buttheyalsoexcelatquality.However,severalfactorspresentpotentialrisksthatcouldundermineChina’scurrentleadingposition,includinganescalatingpricewar,issuesofovercapacity,risinggeopolitical

tensionsandtheadventofnext-generationbatterytechnologies.

•Third,industrialpolicyispropellingtheshifttoEVsintheUS

autoindustrybutcostchallengesandpoliticaluncertainties

remain.Pragmaticindustrialpolicieshavebeenimplemented

acrossthesupplychain.WhiletheyhaveboostedtheEVtransitionandattractedsignificantinvestment(USD66bnbatteryandEV

investmentpost-IRA),thehighcostofEVsremainsachallenge,

exacerbatedbyincreasinglaborcosts(25%wageincreaseoverthe

nextfouryears)andadomesticpreferenceforlargervehicles(70.5%marketshare).PoliticaldynamicsstandasthelargestvariableinthefutureofUSautoindustry–apotentialsecondTrumppresidency

couldsetthepathonanalternatecoursegiventhedivergenceinthetwoparties’positionsongreentransformation.

4

AllianzResearch

theroadtoelectrification

Theautomotivemarketisexpectedtonormalize

thisyear:Asdemandlosesmomentumfollowinga

strongreboundin2023,weexpectthegrowthofnew

autoregistrationstoslowdownto+1.9%.Newauto

registrationssawasignificantrecoveryin2023asCovid-inducedsupply-chaindisruptionseasedandpent-up

demandreleased.Additionally,resilienteconomicgrowthandstrong,albeitslowing,growthinEVsfuelledcarsales–totalglobalautoregistrationsincreasedby+11.3%to

nearly88mn,thoughisstillbelowpre-pandemiclevels.

Thethreelargestautomarkets–China,theUSand

Europe–allrecordedstronggrowthin2023,at+11.9%,

+12.5%and+17.2%respectively.However,lookingahead,weexpectoverallgrowthtonormalizeto+1.9%thisyear(Figure1)duetosubduedconsumerspending–especiallyinChinaandEurope–andsub-palglobaleconomic

growth.Geopoliticaltensionscouldalsohitoverall

demandwiththeprospectofhighertariffs.ButEVsstill

remaininarelativesweetspotdespitemajorheadwinds(Figure2).WeexpectthesaleofnewEVpassengercarstoexceed18mn(+32.8%y/y)in2024,withEuropeleadingtheway(+41.2%).

Withintensifiedcompetitionandanuncertain

environment,automakersarelikelytofacediminishingpricingpowerandcontractingmarginsin2024across

allregions.Weexpectautocompaniestodiversify

theirinvestmentsacrossICEvehicles,hybridmodels

andfullyelectricmodelsinordertostayagileinthe

evolvingmarket,resultinginincreasedR&DandCapEx

spending.TheR&DratioandCapEx-to-salesratioof

thetop30automakersshouldreach4.5%(+14pps)and

5.4%(+33pps)in2024(Figure3).Ontheotherhand,the

heightenedcompetition,whichisparticularlyintense

intheEVsegmentandinChina,willhurtautomakers’

pricingpower.Weexpectanacceleratedconsolidationasautomakersfaceamarginsqueezeandlaggardsstruggletosurvive.GrossandEBITmarginsarelikelytodeclineto18.7%(-28pps)and5.2%(-164pps)thisyear(Figure4).Wealsoexpectariseinintra-regionalcollaborationamongautomakersandstakeholdersacrossthesupplychaintogainanedgeinthereshuffling.

21March2024

5

Figure1:Newautoregistrationsbyregion(mnunits)

100

80

60

40

20

0

Asia

SouthAmerica

NorthAmericaEurope

OtherregionsGrowthrate(rhs)

131415161718192021222324e

15%

10%

5%

0%

-5%

-10%

-15%

Sources:nationalassociations,OICA,Wards,ACEA,AllianzResearch

Figure2:EVsalesandgrowth

20

18

16

14

12

10

8

6

4

2

0

EV(mnunits)EVsalesgrowth(rhs)

1314151617181920212223e24e

140%

120%

100%

80%

60%

40%

20%

0%

Sources:IEA,AllianzResearch

Notes:thedataonlyincludespassengervehicles

AllianzResearch

6

Figure3&4:Investmentandmarginsoftop30autocompaniesbysales

6%

5%

4%

R&D%CapEx-to-sales

21%

20%

19%

18%

17%

161718192021222324e

GrossmarginEBITmargin(rhs)

161718192021222324e

8%7%6%5%4%3%2%1%0%

Sources:Bloomberg,AllianzResearch

Moreimportantly,theglobalautoindustryisundergoingitsmostsignificantparadigmshiftsincetheadventof

vehiclespoweredbyinternalcombustionengines(ICEs).

Toreachtheirambitiousclimatetargetsandachieve

carbonneutrality,governmentsaroundtheworldare

activelypromotinggreenenergyoverfossilfuels.The

autoindustrywillplayapivotalroleinthistransition,

whichwilldependondrivingupthenumberofelectric

vehicles(EVs)inuse.Inthiscontext,thedefiningattributeofacarisgraduallyshiftingfromenginecapacity—a

domainwhereEuropean,US,JapaneseandSouthKoreanautomakersexcelledduringtheICEera—tobatteryandsoftwarecapabilities.Amidstthisstructuralshift,Chinahasrisenasadisruptiveforce,havinginvestedinbatteryandsoftwarecapabilitiesformorethanadecadeandsecuredaleadingposition.Asaresult,itisreshapingtheglobal

autolandscapewithitsrapiddevelopmentinEVsanddominanceovertheentiresupplychain(Figure5).

Butthedeterioratingpoliticallandscapehaspavedaturbulentpathforthispivot.Amidelevatedgeopoliticaltensions,EuropeandtheUSaregrowingincreasingly

waryoftheirdependenceonChinesesupplies,aswell

astheimpactofthegrowingpopularityofChineseEVs

ontheirlocalindustries.Forinstance,batteriesrepresentthesinglelargestexpenseintheproductionofanEV,

typicallyaccountingforaround40%ofthetotalcost.Sixofthetop10globalmanufacturersofbatteriesarebasedinChina,withtheremainingfouralsoinAsia,together

accountingfor92.1%oftheworld’stotalbatterycapacityinstallationin2023(Figure6).Inresponse,governments

havebeentighteningrestrictionsandscrutinyoverChineseautoimports.Tradebarriersonautoandauto-related

productshavebeenincreasingabovetheirhistoriclevelssince2019(Figure7).Biden’sInflationReactionAct(IRA),forexample,offersuptoUSD7,500intaxcreditsforthe

purchaseofnewEVsbutexcludesthosewithChinesecomponents.AndtheEUlaunchedananti-subsidy

investigationintoChinesecarmakerslastyear,which

couldpotentiallyleadtoafurtherincreaseintariffs.

Thesegeopoliticaltensionsareaddingtotheuncertaintyofthepathtoelectrification.SinceChinesecompanies

canproduceEVsatmuchlowercost,thankstothewell-

establishedlocalsupplychain,cheaperlaborcostsand

scaleeconomies,theinfluxofcheaperChineseEVscouldbridgethegapinthelackofmass-marketmodelsinthe

West,thusacceleratingtheEVtransition.Butpolicymakersfaceadilemmabetweengoinggreencheaperand

quickerandtherisksthisposestolocalindustriesandemployment,addingtotheuncertainty.

Theuncertainregulatoryclimatefurthercomplicates

theindustry’snear-termtrajectory.TheEUhascarved

outanexemptionfore-fuelsinits2035banonthesale

ofnewfossil-fueledvehicles,whiletheUKhaspushed

backitssimilarbanfrom2030to2035.LookingacrosstheAtlantic,thepotentialreturnofTrumptotheWhiteHousecouldalsohaveimplicationsfortheEVtransitioninthe

world’ssecond-largestautomarket.Thesedevelopmentsunderscoretheintricateinterplaybetweenregulatory

decisions,marketdynamicsandgeopoliticalfactorsthatwillshapetheglobalautoindustry’sgreentransformation.

21March2024

Figure5:RegionaldistributionoftheEVbatterysupplychain

ChinaEuropeUnitedStatesOther

100%

75%

50%

25%

0%

Sources:IEA,AllianzResearch

Figure6:Installedcapacityofmajorbatterymakers(MWh)

20232022

250000

200000

150000

100000

50000

0

Sources:CleanTechnic,AllianzResearch

Notes:*referstoChinesecompanies,**referstoSouthKoreancompanies,***referstoJapanesecompanies

Figure7:Tradebarriersoncarsandrelatedproducts

500

450

400

350

300

250

200

150

100

50

0

20162017201820192020202120222023

ImporttariffsNon-tariffbarriers

Sources:GTA,AllianzResearch

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AllianzResearch

8

Europeanautomakers

arelosinggroundfast

Theautoindustryhasbeenthebackboneofthe

Europeaneconomy,notonlydrivingindustrial

innovationandtechnologicaladvancementsbutalso

creatingsubstantialemploymentopportunities.The

EUautosectorcontributestoaround6%oftheregion’s

output,accountsforcloseto950,000firmsandemploys6.5mnpeople.Someestimatesthatincludeindirectjobscountasmuchas13mnpeople,whichwouldrepresent7%oftotalemploymentintheEU.Thesectoralsoservesas

aninnovationhubastheEU’slargestinvestorinresearchanddevelopment,contributing32%totheregion’sannualR&Dinvestment(nearlyEUR73bnin2022,Figure8).

Additionally,theautosectoralsoplaysacrucialroleintheregion’sexportmarketasEuropean,especiallyGerman,

carmakershavebeenrenownedfortheirengineering

prowess,designandperformance.In2022,theEU

exportedEUR158bnworthofcars,whichaccountedfor2.8%ofthebloc’stotalexportvalue.Germanyclearly

dominatesthesectorintheEU,accountingfor12%ofthenumberoffirmsintheEU,28%ofthepersonsemployedand34%oftheturnover.ItisalsoworthnotingthattheautoindustryinGermanyisconcentratedinthewesternpartofthecountry,whichhasbeenhistoricallyhometosomeofthelargestmanufacturers(Figure9).

Figure8:R&DspendinginEurope(EURmn)

70000

60000

50000

40000

30000

20000

10000

0

GermanyFranceSpainItaly

ManufacturingAutomotive

Sources:Eurostat,AllianzResearch

21March2024

9

Figure9:AutoplantsinEurope

Sources:KlierandRubenstein(2016)

However,havinglongfocusedontheirestablished

strengths,Europeanautoincumbentsarrivedlateto

theEVgameandarestrugglingtoproduceaffordablemodelsprofitably.Affordabilityremainsthebiggest

factorholdingconsumersbackfromanEVpurchase,

accordingtoasurveybyS&PGlobalMobility,with

nearlyhalfofrespondentsconsideringEVstobetoo

expensive.Thoughcarmakersareracingtocuttheir

costs,elevatedenergyandlaborcostshavemadeit

difficulttomaintainprofitabilitywhilesellingataffordableprices.Consequently,Europeancarmakershavefocusedpredominantlyonthepremiumsegment,leadingtoa

lackofaffordablemodelsinthemarket.TheaveragepriceofEVsinEuropewasEUR55,821in2022–27%higherthanthatofgasolinecars–andalmostallEV

offeringswerepricedaboveEUR20,000.Incomparison,

EVscostEUR31,829onaverageinChina,athirdlower

thanthepriceofgasolinecarsin2022.Whilegrappling

withthehighcostsandlowprofitabilityofEVs,EuropeanautomakersarealsofacingpotentialprofitabilitysqueezesonICEvehicles.Lastyear,theEUreachedaprovisional

agreementonEuro7,anupdatedregulationtoincludeadditionalrulesforvehicleemissionsandimposestricterrequirementsforvehiclelifetimes.ThenewlegislationisestimatedtoincreasethedirectcostbyEUR2,000perICEcar/van(Figure10).

AllianzResearch

10

Figure10:AverageincrementalcostsofEuro7forcars/vans(EUR/vehicle)

3000

2500

2000

1500

1000

0

500

IndustryECdirect

directcostscostsPI(Gasoline)

Industrydirectcosts

ECdirect

costs

CI(Diesel)

Industryindirectcosts

Sources:FrontierEconomics,ACEAmemberdata,AllianzResearch

Inaddition,Europe,particularlyGermany,isfacing

significantchallengesinretaininginvestmentwithintheregionamidgrowingprotectionism.TheUSisemergingasahighlyattractiveinvestmentdestinationforEuropeancompanies,drivenbygenerousfederaltaxcreditsand

statesubsidies.Thisimpactisespeciallypronounced

amongGermancompanies,whichcommittedarecord

USD15.7bntoUSprojectsin2023,nearlydoublethe

amountfrom2022.Meanwhile,thegapbetweeninboundandoutboundinvestmenthaswidened,reachinga

recordhighin2022,withmorethanUSD135bninforeigndirectinvestmentleavingGermanyandonlyUSD10.5bn

entering.Theautosectorisemblematicofthistrendas

Volkswagen,Mercedes-BenzandZFFriedrichshafen

spearheadedthethreelargestUSprojectsbyGerman

companiesin2023.Theircombinedinvestmenttotals

USD4.4bnandisexpectedtocreate6,300jobs.Notably,

VolkswagenearlierdecidedtoprioritizeabatteryplantinNorthAmericaoverapreviouslyplannedfacilityinEasternEurope,enticedbytheprospectofreceivinguptoUSD10bninUSincentives.Thistrendislikelytocontinuegiven

thehighproductioncosts,shortageofskilledlaborandlackofcomparableincentivesintheEU.Accordingtoa

surveybytheGermanAmericanChambersofCommerce,96%ofGermancompaniesintheUSplantoexpandtheirinvestmentsby2026.

Consequently,Europeanautomakersareexperiencing

anotabledeclineinmarketshareintheirhometurf,a

trendlargelyattributedtoChina’sevolvingrolefromamajorimportertoaformidablecompetitor.Thisshiftis

particularlyimpactfulforsomeofEurope’smostrenownedautomakersthathavetraditionallydependedonthe

Chinesemarketforasignificantportionoftheirsalesandprofits.Asaresult,EuropeanbrandsarelosinggroundinboththeEUandChina,withtheirmarketsharedecreasingby3.6ppsand4.5pps,respectively,between2019and

2022(Figures11&12).ThesedecreasescorrespondwiththeriseofChineseautomakers,whichhavenotonly

solidifiedtheirpositioninthedomesticmarket–wherethereisagrowingpreferenceforlocalbrands–buthavealsomadesignificantinroadsintoEurope,bolsteredbytheirEVofferings.Consequently,Europeanautomakersarebecomingincreasinglypessimisticabouttheir

competitiveness,asevidencedbythedownwardtrendintheperceivedcompetitivenessofautomotivecompaniesinGermanyandFrance,whichhavelongbeenconsideredpowerhousesintheEuropeanautoindustry(Figure13).

11

21March2024

Figure11&12:Europeancarmakersarelosingmarketshare

MarketshareofautointheEUbyregionMarketshareofautoinChinabyregion

76%75%74%73%72%71%70%69%68%67%

MarketshareofEuropeanbrandsintheEU

50%

1.4%

1.2%

1.0%

0.8%

0.6%

0.4%

0.2%

0.0%

40%

30%

20%

10%

0%

MarketshareofChinesebrandsintheEU(rhs)

2019202020212022

MarketshareofEuropeanbrandsinChinaMarketshareofChinesebrandsinChina

2019202020212022

Sources:ACEA,AllianzResearch

Figure13:Perceivedcompetitivenessonforeignmarketsbyfirmsintheautoindustry

80

60

40

20

0

-20

-40

-60

-80

Germany-extra-EU---Germany-intra-EUFrance-intra-EUFrance-extra-EU

Sources:EuropeanCommission,AllianzResearch

AllianzResearch

12

Thetransformationofthesectorisalreadypushingup

insolvenciesandthreateningemployment,with730,000jobsatrisk,especiallyinGermany.InGermany,the

ongoingtransitionisleadingtofewerfirms,withdivergingtrendsamongsub-sectors:anincreaseinthenumber

offirmsinmanufacturing(indicatingthatthestructural

changesinthesectorarealsofosteringnewbusinesses)

thathasbeenmorethancompensatedbythedecrease

inthetrade/maintenancesegment.Thenumberofauto

sectorinsolvenciesinGermanyhasremainedrelatively

moderatesofar,comparedtoothercountriessuchas

FranceandtheUK,aswellascomparedtoothersectors

withinthecountry.However,theupwardtrend(+13%y/y

in2023)confirmsthatmorefirmsarestrugglingtoadapttothechangesinthesector.Withregardtoemployment,sinceanEVismadeupoffewerparts,weestimatethat

companiesinthemanufacturingsegmentscouldoperatewith30%fewerpeople.Thiswouldmean730,000jobs

atriskintheEU,includingatleast260,000inGermany.

Thesenumberscouldevenbehigher,especiallyifEU

automakerslosefurthermarketsharesand/ordecideto

offshoreproduction.Germanyisparticularlyexposed

asthesectoris(i)bothhighlyexport-oriented,and

thereforemoreexposedtocompetitionfromforeign

brands,notablyChineseones,and(ii)muchmorelabor-

intensive,andthereforeexposedtotheriskofoutsourcing/subcontractingtolow-wagecountries,notablyEastern

Europeancountrieswhereunitwagecostsaresignificantlylower(between60-70%).

by2035.However,incomparisontotheUSandChina,

theEU’sapproachlackscoordinatedsupportanda

comprehensivestrategy.Bymid-2023,20EUcountriesdidnotprovideanyinfrastructureincentivesandsevenofferednosubsidiesforEVpurchases.Incentivesarescaling

backevenfurtherenteringinto2024,withGermany

terminatingthehandoutsearlierthanoriginallyplannedandFrancecurbingsubsidiesduetobudgetconstraints.Theavailabilityofchargingstations,whichiscrucialto

addressEVbuyers’rangeanxiety,isunevenwithinthe

region,with60%ofallchargingstationsconcentrated

intheNetherlands(149,025),Germany(125,997)and

France(124,526,Figure15).Policymakersshouldstep

uptheirsupportfortheexpansionofchargingnetworksandprovidemoreincentivestoencouragetheswitchtoEVs.Furthermore,keepinganedgeintheEVcompetitionismorethanjustexpertiseincarmanufacturing.Italsorequiresarobustsupplychainaswellasadvancementsinbatteryandsoftwaretechnology,whicharecrucial

formanagingcostsandenhancingdrivingperformanceandexperience.Hencepolicymakersshouldtakeactionstoattractinvestmentsacrosstheentiresupplychain,

ensuringaccesstoessentialrawmaterials,improving

refineryinfrastructureandadvancingbatterytechnologytonavigatethecrossroads.

Tocatchupinthenewraceandboostmarketuptake,Europeshouldprovidemorecarrotsthansticks.

Amongthethreelargestautomarkets,theEUhas

setthemostambitiousemissions-reductiongoalbyeffectivelybanningthesaleofnewfossil-fuelvehicles

Figure14:Insolvenciesinthemanufacturing(left)andtrade/maintenance(right),numberofcases,annually

100

90

80

70

60

50

40

30

20

10

-

nGermanyFrancewUK

08091011121314151617181920212223

2500

2000

1500

1000

500

-

GermanyFranceUK

08091011121314151617181920212223

Sources:DeStatis,ONS,AllianzResearch

21March2024

Figure15:DistributionofchargingstationsintheEU

160000

140000

120000

100000

80000

60000

40000

20000

0

Sources:EuropeanCommission,AllianzResearch

13

AllianzResearch

14

Box1:ShiftinginternationalvaluecreationstructuresintheGermanautomotiveindustry

TheautomotivesectorplaysapivotalroleinGermany,theleadingmarketandproducerinEurope.Theindustryservesasaglobalexportpowerhouseanddriverofinnovationinmobility.Companiesactiveinthesectorrangefromlargeautomanufacturerstoanetworkofsmall-andmedium-sizedsuppliers.Notably,around85%ofautoindustrysuppliersfallwithinthemedium-sizedcategory.In2020,theindustry’sproductionreachedUSD433bn,overathird

ofthisamountrepresentingthevalueadded(VA)generatedbytheGermanautomotiveindustry.Outofthegoodsmanufactured,USD96bnwereconsumeddomesticallyinGermany,whileanadditionalUSD156bnwereexportedtoforeignmarkets.TheremainingnearlyUSD286bnwasutilizedasintermediateconsumptionbysectorsbothathomeandabroad.

Theautomotiveindustryhastraditionallyreliedheavilyondomesticvaluecreation–butthelandscapeischanging.

From1995to2020,therehasbeenanotableincreaseofone-quarterinGermandomesticVAwithintheautomotive

sector,whileforeignVAhassurgedbymorethanthree-quarters.Concurrently,intermediateimportshavenearly

quadrupled.However,despitethesteadyriseinforeignVAandintermediateimports,thegrowthindomesticVAhas

shownsignsofstagnationsince2018.Whencomparingthesetrendstogrossoutput,adifferentpictureemerges.TheshareofdomesticVAasaproportionofgrossoutputhasdeclinedby11.7pps,droppingfrom38.1%in1995to26.4%

in2020,whiletheproportionofforeignVAhasremainedconstant(Figure16).Meanwhile,theshareofintermediate

importshasincreasedfrom7.4%to11.4%.Thisindicatesthatthehigherlevelofinternationalinterconnectednesswithinvaluecreationstructureshasenabledincreasedoutputwithintheindustry.

Figure16:Grossoutput(inUSDbn,left),domesticandforeignVAandintermediateimports(in%ofgrossoutput,right)intheGermanautomotiveindustry,1995-2020

3500

3000

2500

2000

1500

1000

500

0

Grossoutput---VAdomesticVAforeign---Intermediateimports

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

40

35

30

25

20

15

10

5

Source:OECDTiVA,AllianzResearch

Thedomesticmarketcontinuestostandoutastheprimarybuyer.In2020,,two-thirdsoffinaldemandproductioninthesectorwasdirectedtowardsthedomesticmarket.Notably,Chinawasthemostimportantforeignmarketfor

Germanautomotiveproducts,holdingashareof3.2%,followedbytheUSat3.1%andFranceat2.3%(Table1).

Despitethisstrongfocusondomesticsales,theGermanautomotiveindustryboastsarobustinternationalnetwork.

WhileitimportedatotalofUSD304bninintermediategoodsandservices,italsoexportednearlyUSD500bnworthofintermediategoodsandservicestomarketsabroad.

21March2024

Table1:Top10countriesoffinaldemandforproductsfromtheGermanautomotiveindustry,2020

Sharein%

GermanyChina

USA

FrancePoland

NetherlandsItaly

Austria

SwitzerlandSpain

UK

RestoftheWorld

VolumeinUSDmn

702.5

65.1

34.9

3.2

33.1

3.1

25.3

2.3

24.1

2.2

22.7

2.1

19.3

1.8

15.5

1.4

15.4

1.4

14.3

1.3

13.4

1.2

158.8

14.7

Sources:OECDTiVA,AllianzResearch

ChinaisnotonlyakeymarketforGermancarsbutalsostandsoutasthetopcontributorofforeignvalueadded

intheautomotivesector.Thesector’sglobalinterconnectednessisfurtherhighlightedbythesignificantincreasein

foreignVAcontributionstofinaldemand,whichsurgedby77%between1995