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

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