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German car exports to China plunge by a third in 2025, says economic institute

Baden-Wuerttemberg’s economy, once a powerhouse of German manufacturing, is under pressure as the automotive sector struggles, insolvencies rise, and unemployment slowly ticks up, while innovation-driven industries offer a glimmer of growth. Politicians face mounting pressure to invest in infrastructure and support structural change to stabilize the state’s industrial heartland.

February 24, 2026

Friederike Heine/Reuters

German car exports to China plunge by a third in 2025, says economic institute

German Chancellor and leader of the Christian Democratic Union (CDU) Friedrich Merz reacts next to a Mercedes 300, a car from the fleet of former Chancellor Konrad Adenauer, outside CDU party congress venue, ahead of their party convention in Stuttgart, Germany, February 19, 2026.

Thilo Schmuelgen/Reuters

German car exports to China plunged by roughly a third in 2025, extending a steep decline that has wiped out more than half the sector's shipments since their 2022 peak, according to a study released by the German Economic Institute (IW) on Tuesday.


Exports of cars and parts fell to under 14 billion euros ($16.49 billion) last year, down from nearly 30 billion euros three years earlier, underscoring the rapid erosion of Germany's foothold in its most important foreign market.


Carmakers — which make up Germany's largest industrial sector — are facing their toughest test in decades, squeezed by higher U.S. import tariffs, weak demand in Europe, a costly transition to electric vehicles and an intensifying price war in China.


The IW data comes as Chancellor Friedrich Merz travels to China for the first time, a closely watched trip expected to shed light on how Europe's biggest economy seeks to recalibrate ties with its largest trading partner amid mounting competitive and geopolitical strains.


($1 = 0.8490 euros)

-Friederike Heine/Reuters

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