Introduction: General Statistics
In 2021, 2.37 million cars were exported from Germany (Statista, 2022). According to Statista (2022), the value of exported and imported vehicles in Germany from 2010 reached its peak in 2020, and the value of vehicles exported from Germany amounted to 184 billion euros.
The modern car was invented in Germany. Karl Benz and Nicholas Otto developed the four-stroke combustion engine in the 1870s. In 1901 Germany was producing an estimated 900 cars a year. In 1926 Daimler-Benz was created and started making Mercedes-Benz. BMW began to produce its vehicles in 1928. Most of the auto plants were destroyed or heavily damaged during World War II. The automakers rebuilt their plants. The Volkswagen Beetle was back in production in 1945 and by 1965 had sold 10 million Beetles. Mercedes Benz resumed production in 1946. GM resumed Opel production in 1947 and Ford in 1948.
International Trade Theory
According to a recent Ernst & Young study, German-based automotive hubs have the greatest levels of product quality; 88 percent of respondents rated Germany as the most competitive hub with the best quality globally. Germany has gained market power and advantage by developing high-end, best-quality products and patenting original technologies.
FDI Prospects and Data
In 2020, Germany’s stock of FDI from abroad was valued at 1.13 trillion US dollars, up from 970.78 billion the year before (Statista, 2022). The amount of FDI entering Germany has increased by over 253 billion dollars since 2012 (Statista, 2022). The pattern is likely to continue.
Highlights and Trends: GDB and FDI
Germany continues to be regarded as one of the most desirable business destinations in the world, according to the European Attractiveness Survey. In terms of the finest investment locations in Europe, Germany is now tied with France and the United Kingdom. Preliminary data created for the Financial Times’ FDI Markets database indicates that in 2021, Germany was the third-most-popular site for FDI project destination in the globe and the first in Europe (VDA, 2022). The car industry is central to the country’s economy, representing 9.8% of gross added value (VDA, 2022). It directly employs around 800.000 people, rising to a total of 936,000 if one includes supplier companies, from electrical engineering to metal production (VDA, 2022). Nearly EUR 274 billion in international market revenue was earned by German passenger and light commercial vehicle OEMs in 2021, an increase of 10% over 2020 (VDA, 2022). The product category with the highest export share in 2021 belongs to the automotive industry, which accounts for more than 13% of total German exports. Compared to 2021, domestic market revenue is up to EUR 136.9 billion (Koptyug, 2022). In 2021, the auto sector listed a turnover of EUR 410.9 billion – around 20 percent of total German industry revenue (VDA, 2022).
Regimes, Rules for Foreign Investors
German foreign investment policy is rather permissive. Germany views its open investment policy as one of the pillars of its national economic growth. The Foreign Trade and Payments Act and the Foreign Trade and Payments Regulation control the screening of foreign direct investment (FDI) in Germany. In cooperation with the Foreign Office, the Ministry of Defense, and the Ministry of the Interior, the Ministry for Economic Affairs and Energy conducts the evaluations (Global Legal Group, 2021). Sector-specific reviews and cross-sector reviews are distinguished under German law. Which process is appropriate depends on the area of business that the purchase will affect. A cross-sector assessment may be required for any investment in a German firm by non-EU or non-EFTA investors who acquire at least 25% of the voting power (or 10% in the case of businesses running the most vital infrastructures, such as energy or transportation facilities) (Global Legal Group, 2021).
“Germany is the ideal location for R&D in the automotive sector. Here you will find the best talent and excellent infrastructure. Thanks to its innovation and research efforts, Germany is becoming an even more attractive design and R&D location.”
Hui Zhang, managing director, NIO Germany GmbH
Hui Zhang, managing director of NIO Germany GmbH, claims For R&D in the automobile industry, Germany is the best place. The greatest talent and first-rate facilities are located here. Germany is improving its appeal as a design and R&D site as a result of its innovation and research activities. Indeed, the statistics and data presented speak for themselves.
Global Legal Group. (2021). Foreign Direct Investment Regimes Laws and Regulations Report 2022 Germany. International Comparative Legal Guides International Business Reports. Web.
Koptyug, E. (2022). Automobile industry in Germany – Statistics & Facts. Statista. Web.
Schulman, M. (n.d.). History of the German Car Industry. Web.
Statista. (2022). FDI inward stock in Germany 2012-2020. Web.
The German Association of the Automotive Industry (VDA). (2022). The Automotive Industry Germany. Germany Trade and Invest. Web.