Cost-Cutting by Germany’s Car Manufacturers: Can Key Industry Maintain Its Position?

The automobile industry is facing major upheavals. Its costs are rising steadily and the biggest German car manufacturers are announcing massive long-term cost-cutting programmes. Ferdinand Dudenhöffer, CAR-Center Automotive Research at the University of Duisburg-Essen, assumes that German car manufacturers are reducing their production depth and will press their suppliers for pricing concessions. In view of this, significant expansion in the foreign production levels of the German supplier industry can be expected over the next five years. The intensity of the transfer process will depend on logistics costs and the further expansion of car manufacturers’ production plants. However, one thing is clear: the higher pressure to cut costs will lead to lasting changes in the German automobile industry. Overall, small to medium-sized suppliers are expected to come under the greatest pressure. In the view of Heike Prof, University of Duisburg-Essen, cost-cutting goals, especially in purchasing, are to be achieved by further shifting added value to suppliers and through a more consistent reduction in complexity. In her opinion cost-cutting programmes will not be enough to prepare the car manufacturing industry for a market downturn. Lasting cost-cutting and revenue-optimising decisions will have to be taken. Possible approaches include identical part and change management, as well as multi-domestic management. Klaus Bräunig and Marius Baader, Verband der Automobilindustrie (VDA), Berlin, see internationalisation as the driver for production and exports. Politicians should pay heed to the “cost-cutting programmes” implemented by German car manufacturers by showing greater cost-consciousness in their public spending and, at the same time, by adopting sensible measures in education, infrastructure, trade and environmental policy.