Germany is experiencing significant economic challenges, marked by two consecutive years of GDP contraction. Its automotive sector, once a cornerstone of its economy, is facing plummeting earnings, with major players like Volkswagen, BMW, and Mercedes reporting substantial declines in operating income. Compounding these issues, high energy and labor costs, along with newly imposed tariffs on U.S. imports, threaten to impact sales further. The declining demand for European cars in China and competitive advancements from domestic automakers add to the urgency for a turnaround.
Volkswagen's operating income fell 37% year over year in the first quarter of 2025. BMW saw a drop of 28.3% in earnings before interest and taxes.
The 25% tariff on imported vehicles from the United States and a potential 50% increase could severely impact European automakers already facing sales struggles.
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