Germany: Automakers’ Profits, Tax Revenues in Freefall

Germany’s economic situation is a growing concern as it seeks to steer its weakening industry onto a “war path” to the detriment of crucial real sectors of the economy, from automobiles to energy. According to financial reports analyzed by German newspaper Handelsblatt, the trio of German auto industry giants – BMW, Volkswagen, Mercedes-Benz – “recorded an overall drop in profits of 20% in the first three months of 2024 compared to the same period last year.”

“The economic stagnation in Germany,” wrote the German economic, financial, and political newspaper, “as well as the minimal growth in Europe are reflected in the balance sheets of the largest German companies listed on the stock exchange.” The automobile industry, long considered “traditionally Germany’s strongest sector,” contributed a 4-percent drop to this fall, while total net profit of the three automakers fell by 2.5 billion euros, down to 9.2 billion euros in the first three months of the year.

A cold shower also came from German Finance Minister Christian Lindner, who on Thursday, May 16, unveiled the latest forecasts for tax revenues in 2024. According to expert estimates, governments at all levels, from local to federal, will receive €80.7 billion less over the next five years than anticipated in the previous estimate of €995.2 billion, published in October 2023. For the German federal government alone, the loss would amount to €41.6 billion.