Competitive pressure on German automobile production

The production of cars as well as components and parts continues to be concentrated on the triad of advanced industrialised countries. This should not hide the fact, however, that the German automotive industry is faced with an intense competition from below in two areas: final production abroad and the international outsourcing of intermediate production. Dr. Peter Nunnenkamp of the Institute for the World Economy in Kiel shows in this article that foreign production and outsourcing are both gaining importance and that both phenomena are driven by international cost differences. Also in anticipation of the pending EU eastern enlargement, the network of intermediate production has grown more dense, and in final production, substitution effects can be increasingly observed at the expense of the automotive exports and domestic production from or in Germany.