German Automobiles
Today I researched more into the German economy’s structure.
I had always known that Germany was high up in the rankings in terms of GDP per capita, at 16th in the world. However, I had not expected it to be the 4th most complex economy in the world and was even more surprised at it being 3rd place previously. They seem to have a higher complexity expected given their income. I thought that this would be a positive thing for growth in the German economy, but it seems like that is not necessarily the case. It is predicted that the German Economy will be in the bottom half globally in terms of annual growth rate.
When looking at Germany’s economic structure, I found it interesting how there was a large difference between net and gross percentages in trade flow. For example, in the 2021 export basket, cars made up less than 7% of gross export value but they made up almost 12% in net value. When looking at an area like services, it was just the opposite with gross percentages being much larger than net ones. Germany has done well with export growth and tapping into all sectors. However, their global market share has fallen in machinery manufacturing. Another issue is that Germany has focused on chemical exports in the previous five years. This is a problem because this is a declining sector across the world. When looking at diversification into new products, they are at similar levels to countries like France and the UK. This has contributed $15 to the German Capita which is not very substantial compared to that of the Netherlands which has seen a $219 value from diversification. Germany seems to have already utilized opportunities to diversify in related products within existing capabilities. This means that to continue creating new opportunities, they should focus on new products.
I wanted to look a bit into the German automobile sector. As they are known for producing cars and many famous brands have come out of German factories. In 2021 they produced 3.1 million passenger vehicles making it the largest in Europe. The automobile industry also generated 24% of their total domestic industry revenue. This industry also contributes greatly to their exports as I stated before with 77% of cars manufactured in Germany going to their exports market. These numbers are this large because Germany is known for its excellence in engineering and this is recognized across the whole world. German cars are not only sought after for their design but also for their safety and reliability. Germans were always the frontrunners in terms of car production with people like Karl Benz in the late 1800s and early 1900s. However, for a long time they were not able to keep up with the production rate of countries like the United States. This was until the 1980s and 1990s where the German automobile industry grew at amazing rates. There was a lot of international expansion with the purchase of plants across the globe. There was also the purchase of other car brands like Volkswagen acquiring Bentley, Bugatti and Lamborghini. This continued in the new millennium with BMW purchasing the Rolls Royce name and Volkswagen taking full ownership of Porsche. Now Germany has clearly set itself as one of the front runners in automobile production and it looks like they will continue on that path for years to come.
