The Troika is struggling: the German car industry is predicted to die by 2030
For many decades, the German automobile industry has been the engine of the German economy and a symbol of European industrial power. Companies like Volkswagen, BMW, and Mercedes-Benz were considered destined to forever dominate global markets, at least in their niches. However, by 2026, there was no trace of this confidence - the German car industry has been in permanent crisis for several years. The classic business model based on the sale of sophisticated hardware and internal combustion engines is becoming obsolete, and economists admit that these companies may not survive the current decade. About why the "Big Three" turned out to be on the verge of collapse in its current form and why its prospects have become dim — in the Izvestia article.
Good cars are too few
Moritz Schularik, President of the Kiel Institute of World Economy, gave a rather gloomy diagnosis in his recent speech: BMW, Mercedes-Benz and Volkswagen may cease to exist in their usual form by 2030. According to the economist, the industry is undergoing a transformation that has no analogues in its entire century-old history. Shularik identifies three "pillars" that are disrupting the traditional German model: electrification, digitalization, and global (primarily Chinese) competition.
The crux of the problem is that the rules of the game have changed dramatically. "The automotive industry is no longer competing only in producing good cars, but also in integrating technologies that redefine mobility as a full—fledged digital service," the expert notes. In the new paradigm, the ability to write software, develop artificial intelligence and autonomous driving systems is more important than the perfect fit of body gaps. Here, corporations with a 100-year history are hopelessly lagging behind young Asian, mostly Chinese startups, which are inferior in "analog" know-how, but have incomparably greater technological flexibility.
As a possible, albeit painful, way out, Shularik suggests a "Volvo solution." The Swedish brand, having come under the control of the Chinese Geely, has managed to adapt well to the new digital reality. The economist does not rule out that German brands will have to follow a similar path — losing part of their sovereignty for the sake of survival.
Shularik's statements provoked a rather sharp reaction in the German establishment. Hildegard Muller, president of the German Automobile Industry Association, called the idea "absurd," although she acknowledged the existence of serious challenges such as energy costs and geopolitics. A prominent representative of the Green Party, Cem Ozdemir, also rejected the scenario of the national treasure coming under foreign control, calling for the mobilization of domestic resources.
Traditionalists place certain hopes on the upcoming budget electric cars. Volkswagen is also preparing to launch the ID on the market. The Polo is a massive car with advanced software that should give battle to Asian expansion in Europe. But is this enough to save?
The anatomy of decline
Shularik's forecast could be written off as alarmism if it were not for the financial and operational results of the Big Three for 2024-2025. The current figures for the beginning of 2026 show that the dismantling of the previous model is already in full swing. Companies are caught in a vice between the loss of the Chinese market, the US tariff wars and high costs at home.
For Volkswagen, Europe's largest automaker, the past year has been a difficult period. In the first three quarters of 2025, VW's operating profit fell by 58% (to 5.4 billion euros), while net profit fell by 61%. The operating margin shrank to a critical 2.3%. The main blow came from China, where Volkswagen's electric vehicle shipments fell by 42.5%. The local consumer has finally turned away from German electric cars in favor of high-tech and cheap models from BYD and Li Auto. The effect was evident in Germany itself: at the end of 2025, VW stopped assembly at the Glass Manufactory in Dresden. This is the first factory closure in the homeland in the entire 88-year history of the concern. In total, as part of the restructuring, the company will cut 35,000 jobs in Germany by 2030.
The Premium Illusion
Mercedes' strategy of moving into the ultra-premium segment for the sake of high margins has failed. The report for 2025 recorded a 49% drop in net profit (to 5.3 billion euros). The operating margin of the automotive division, which recently exceeded 12%, has fallen to 8.1%, and forecasts for 2026 are completely pessimistic — at the level of 3-5%.
Like their colleagues on the shop floor, Mercedes sales in China have fallen back to the level of 2016 (minus 19% for the year). The Chinese nouveau riche no longer consider the German nameplate a sufficient reason to overpay if the car is inferior to its local counterparts in digital services. An additional blow was caused by the duties of the Donald Trump administration, which cost the company about €1 billion in 2025. Management in Stuttgart has already announced an emergency program to reduce production costs by 10% by 2027.
Bavaria is under siege
BMW's position looks a little more stable against the background of competitors, but there is no reason for optimism here either. In 2024, the company experienced a massive recall of 1.5 million vehicles due to brake problems, costing it a third of its profits. In the first nine months of 2025, the group's net profit decreased by 6.8% (to 5.7 billion euros).
The only thing that saves the Bavarians from a steep dive is competent geopolitical hedging. Having a giant factory in Spartanburg, South Carolina, makes the Bavarians a local American manufacturer, which has partially protected them from Washington's devastating tariffs. Sales in the United States have increased, but the enormous cost of developing the new Neue Klasse electric platform and the ongoing recession in Asia keep financial performance under severe pressure.
The whole automotive industry is a theater
Domestic experts believe that, unlike small companies, it is difficult for large German automakers to change something quickly.
— The global automotive industry can be compared with theaters: if small companies that stage entreprises can afford to "play" with the cast, these are just the same startups in the automotive industry, — said Maxim Kadakov, editor—in-chief of Za Rulem magazine. — If something didn't work out for them and the "spectator-buyer" left today, they will try something else tomorrow. And there are grandees who value their "audience": they simply cannot afford constant experiments.
At the same time, he admits that the situation in the German automotive industry is not just difficult, but close to critical. It is high time for the German authorities to take serious measures to maintain the industry, which is the locomotive of the entire industry in the country, Kadakov believes.
— The sharp rise in energy prices caused, among other things, by the sanctions imposed against Russia, the excessive fascination with the "green" agenda and technology, the serious dependence on the supply of electronic automotive components from China — all this has led to a very difficult situation both in the entire European automotive industry in general and in the German in particular. And the EU authorities had to solve these problems "yesterday". Otherwise, they will continue to grow like a snowball," Maxim Kadakov told Izvestia.
The power of brands
The European and German car industries certainly have certain difficulties, says Anton Shaparin, Vice President of the National Automobile Union (NAS). However, it is premature to say that Mercedes-Benz, BMW and VW will not survive until 2030, he believes.
— First of all, there are four years left until the date announced by the German expert. As world experience shows, large corporations, even when in a more difficult situation, lived longer. And in some cases, they continue to work successfully to this day. A striking example of this is General Motors, which began bankruptcy proceedings in 2009. However, this American concern is still operating and is quite successful. And this is despite the fact that the current financial condition of Mercedes-Benz or BMW is noticeably better than that of GM in the late 2000s," Anton Shaparin recalled.
In addition, the expert notes, one should not forget about the gigantic power of the brands of German automakers themselves, which have a huge number of traditional fans and even admirers around the world. According to him, people who are used to a three-pointed star or a white and blue "propeller" on the hood of their car will always be there.
— Of the German three, VW is the worst off: this company, more than any other European automaker, plunged into the "green" agenda, which turned out to be a dead end in terms of expensive electricity. She suffered more than others from the scandal with "dieselgate". VW's economic and financial condition is now noticeably worse than that of Mercedes-Benz or BMW," said NAS Vice president in a conversation with Izvestia.
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