Over 25% of German industrial firms report falling competitiveness outside the EU
An Ifo Institute survey shows 25.4% of German industrial companies lost competitiveness outside the EU, with the automotive sector hit hardest as manufacturing jobs dropped by 144,100.
Survey records broad drop in international competitiveness
More than one in four German industrial enterprises fears losing its competitive standing on markets outside the European Union, according to survey results published on Wednesday by the Munich-based Ifo Institute. In the July 2026 survey, 25.4% of manufacturers indicated that their competitive position on international markets was deteriorating. By contrast, only 5.2% of surveyed companies reported an improvement in competitiveness outside Europe. Within the European single market, 17.0% of industrial firms assessed their competitive position as worsening, while 6.3% recorded gains. The survey results show German manufactured goods facing widespread headwinds in export markets across the globe.
German industry continues to fail to gain ground on international markets. Competitive pressure remains high, especially outside Europe.
- Worsening outside EU
- 25.4 %
- Worsening inside EU
- 17 %
- Improving inside EU
- 6.3 %
- Improving outside EU
- 5.2 %
Auto sector and core heavy industries lead declines
Pressure is most acute in the automotive sector, where 43.0% of companies reported a worsening competitive position on markets outside the European Union. In metal production and processing, 29.1% of enterprises reported declining competitiveness abroad. The chemical industry followed with 26.0% of manufacturers reporting weaker international positioning, while mechanical engineering registered 25.5%. Around one in four producers of electrical equipment (24.5%) also saw their competitive standing weakened across international markets. These branches together represent the traditional core of German export-oriented manufacturing.
- Automotive
- 43 %
- Metal production
- 29.1 %
- Chemical industry
- 26 %
- Mechanical engineering
- 25.5 %
- Electrical equipment
- 24.5 %
Strains inside European borders and the beverage exception
Market pressure is not confined to overseas commerce, as many companies also report losing ground within the European Union itself. In the automotive industry, 24.8% of companies reported a worsening competitive position on the European market, making it the sector most frequently reporting domestic European decline. Chemical manufacturers followed closely, with 22.1% indicating that their competitive footing inside the European Union had deteriorated. Across all surveyed industrial branches, the beverage industry was the single positive exception, standing out as the only sector that improved its competitive position both within the European Union and on markets outside the bloc.
Structural roots, job losses, and Chinese competition
The ongoing loss of market standing reflects long-term structural difficulties rather than brief cyclical swings in economic output.
The competitive problems of German industry are structural in nature. Short-term cyclical improvements alone will do little to change that.
The weakening competitive position was accompanied by renewed job cuts across the industrial sector in the first half of the year. At the end of June, the manufacturing sector counted 5.29 million employed workers, representing a decline of 144,100 jobs, or 2.7%, compared to one year earlier. Cyrus de la Rubia noted that competition from Chinese suppliers on their home market and across third markets gained massive intensity within a short time.
The figures show the force with which the China shock is hitting German industry.
