Written by Frode Skar, Finance Journalist.
German car exports to China plunge in 2025 as industry loses ground in key market
German car exports to China drop by a third in 2025 marking structural shift in global auto trade
German car exports to China fell by roughly one third in 2025, according to a study from the German Economic Institute IW, extending a sharp decline that has more than halved export volumes since their peak in 2022.
Exports of vehicles and automotive parts dropped to below 14 billion euros in 2025, down from nearly 30 billion euros three years earlier. The scale of the contraction signals more than a temporary slowdown. It reflects a structural weakening of Germany’s position in what has long been its most important foreign market for cars.
German car exports to China under multi layered pressure
The automotive industry is Germany’s largest industrial sector and a cornerstone of its export driven economic model. When German car exports to China fall at this magnitude, the impact extends beyond corporate earnings to production output, employment and investment.
The decline comes as German manufacturers face simultaneous challenges:
Higher United States import tariffs
Weak consumer demand in Europe
Costly transition to electric vehicles
Intensifying price competition in China
German car exports to China are particularly exposed to the rapid rise of domestic Chinese electric vehicle makers that have improved both technology and cost competitiveness.
From growth engine to competitive battlefield
For more than two decades, China functioned as a growth engine for German carmakers. Premium brands such as BMW, Mercedes Benz and Audi relied heavily on Chinese demand to sustain margins and scale.
The 2025 figures suggest that German car exports to China can no longer be viewed as a stable pillar of growth. Chinese consumers are increasingly shifting toward domestic brands, especially in the electric vehicle segment where aggressive pricing strategies dominate.
The drop from nearly 30 billion euros to under 14 billion euros in just three years highlights how quickly market dynamics can change.
Electric transition and margin compression
The shift toward electric mobility requires massive investment in battery technology, software development and new production infrastructure. At the same time, German manufacturers are competing in a Chinese market defined by price wars and strong state supported local players.
German car exports to China therefore face a dual squeeze:
High development and production costs in Europe
Lower achievable selling prices in China
This combination pressures margins and complicates long term capital allocation decisions.
Geopolitical backdrop adds complexity
The data was released as German Chancellor Friedrich Merz travels to China for his first official visit. The trip is closely watched as Berlin seeks to recalibrate economic ties with its largest trading partner amid rising geopolitical tension.
German car exports to China have long symbolized mutual economic interdependence. Today, that relationship appears more fragile as Europe re evaluates strategic dependencies and China prioritizes domestic industrial champions.
Trade relations are increasingly influenced by broader political and security considerations, adding another layer of uncertainty for exporters.
Broader macroeconomic implications
The automotive sector accounts for a significant share of Germany’s industrial output and export earnings. A sustained decline in German car exports to China could translate into:
Lower export revenues
Reduced industrial production
Pressure on employment
Weaker business investment
If the downward trend continues, Germany may need to accelerate diversification toward alternative markets and industries.
Strategic crossroads for German manufacturers
German car exports to China remain important, but the previous era of predictable expansion appears to be over.
Manufacturers now face key strategic questions:
Should more production be localized within China
Should pricing be adjusted more aggressively to match domestic competitors
Should capital be redirected toward other emerging markets
The answers will shape the next phase of Germany’s industrial model.
Conclusion
The plunge in German car exports to China in 2025 is not simply a cyclical downturn. It signals a structural shift in global automotive competition.
With export values more than halved since 2022, Germany’s largest industrial sector faces one of its most significant tests in decades. The combination of electrification, intense price competition and geopolitical recalibration creates a challenging environment.
German car exports to China will remain a critical indicator of how Europe’s largest economy adapts to a rapidly evolving global market.
