German Automobile Industry

After exploring the Atlas of Economic Complexity in Germany, I found the car industry to be a fascinating topic because Germany is known for its many top-ranking car brands such as Mercedes-Benz, BMW, Volkswagen, and Porsche. In 2020, the automobile industry made up about 11% of German exports, which is equivalent to about $56B. Based on the export growth dynamics statistics, the car industry in Germany had a complexity score of about 1, which is on the higher end of all industries in general. In terms of growth in global market share, the automobile industry has the highest growth rate out of all industries measured in Germany.

The history of the automobile industry in Germany is a fascinating industry to study, just based on the fact that so many prominent automobile manufacturers originated in the country. More importantly than all of the prominent automobile companies, though, is the fact that Nicholas Otto and Karl Benz invented the first “four stroke combustion engine in the 1870’s”, paving the way for cars across the world in the future(History Central). Many of the manufacturing plants were destroyed in WWII; however, they were rebuilt in the 40’s and soon reclaimed market dominance. Today, 65% of globally premium branded vehicles are German OEM-manufactured- a notable statistic.

In terms of when, where, how, and why, Karl Benz and Nicholas Otto’s invention of the four-stroke combustion engine in the late 1800s provides the context for this. They were pioneers in the industry and thus had a competitive advantage compared to any other people or companies entering the market. WWII also provided a great deal of historical context in terms of what allowed German automobile manufacturers to thrive. But in terms of how and why, as we studied in our Industrial Organization class, having a pioneer advantage in an industry and for a particular ‘good’, so to speak, has an impact on its success, which is observable both historically and also today.