Economic overview of germany economics essay

The demography of the Federal Republic of Germany is monitored by the ” Statistisches Bundesamt” (Federal Statistical Office of Germany). The population of Germany is approximately 81, 859, 000 (November 30, 2011), making it the 16th most populous country in the world. Germany’s population is characterized by zero or declining growth, with an aging population and smaller cohort of youths. The total fertility rate has been rated around 1. 4 in 2010 (the highest value since 1990) and has recently even been estimated at 1. 6 after accounting for the fact that older women contribute more to the number of births than in previous statistic models, and total fertility rates increased in younger generations. Fertility was closely linked to educational achievement (with the less educated women having more children than the educated ones). Persons who adhere to no religion have fewer children than Christians, and studies also found that among Christians the more conservative ones had more children than the more liberal ones. The United Nations Population Fund lists Germany as host to the third-highest number of international migrants worldwide. More than 16 million people are of foreign/immigrant descent (first and second generation, including mixed heritage and ethnic German repatriates and their descendants). 96. 1% of those reside in western Germany and Berlin. About seven million of them are foreign residents, which is defined as those not having German citizenship.


The German economy – the fifth largest economy in the world in PPP terms and Europe’s largest – is a leading exporter of machinery, vehicles, chemicals, and household equipment and benefits from a highly skilled labor force. Like its Western European neighbors, Germany faces significant demographic challenges to sustained long-term growth. Low fertility rates and declining net immigration are increasing pressure on the country’s social welfare system and necessitate structural reforms. Reforms launched by the government of Chancellor Gerhard SCHROEDER (1998-2005), deemed necessary to address chronically high unemployment and low average growth, contributed to strong growth in 2006 and 2007 and falling unemployment. These advances, as well as a government subsidized, reduced working hour scheme, help explain the relatively modest increase in unemployment during the 2008-09 recession – the deepest since World War II – and its decrease to 6. 0% in 2011. GDP contracted 5. 1% in 2009 but grew by 3. 6% in 2010, and 2. 7% in 2011. The recovery was attributable primarily to rebounding manufacturing orders and exports – increasingly outside the Euro Zone. Germany’s central bank projects that GDP will grow 0. 6% in 2012, a reflection of the worsening euro-zone financial crisis and the financial burden it places on Germany as well as falling demand for German exports. Domestic demand is therefore becoming a more significant driver of Germany’s economic expansion. Stimulus and stabilization efforts initiated in 2008 and 2009 and tax cuts introduced in Chancellor Angela MERKEL’s second term increased Germany’s budget deficit to 3. 3% in 2010, but slower spending and higher tax revenues reduce the deficit to 1. 7% in 2011, below the EU’s 3% limit. A constitutional amendment approved in 2009 limits the federal government to structural deficits of no more than 0. 35% of GDP per annum as of 2016.


” Germany was in a far better position than expected in 2010 as it belied the gloomy scenario predicted at the beginning of 2009. In 2010, it was Europe’s largest economy in terms of gross domestic product (GDP). Although its economy shrank by 4. 7% in 2009, it bounced back to register a growth of 3. 4% in 2010, mainly due to increasing exports and domestic demand. However, inflation has been on the rise after it fell to 0. 2% in 2009. It grew to 1. 1% in 2010 and in January and February 2011, the higher cost of food and energy accelerated inflation to 2. 0% and 2. 2%, respectively. This was the fastest growth in more than two years, according to the German Federal Statistical Office.” Germany has the second largest export economy in the world. In 1998, export accounted for 25 percent of the gross domestic product and import for nearly 22 percent. Export goods include products from the major industries cited above. Other than coal, Germany lacks fossil fuels, especially oil and natural gas. These products must be imported. Germany’s most important trading partners are France, the United States, the United Kingdom, and other European lands. It also trades actively with East Asian countries and has become increasingly involved in eastern Europe.


During the Cold War India sustained diplomatic relations with West Germany and East Germany. After the fall of the Berlin Wall, and the reconstruction of Germany, relations have further improved. The German ambassador to India, Bernd Mutzelburg, once said that India and Germany are not just ‘natural partners’, but important countries in a world. Germany is India’s largest trade partner in Europe. German Chancellor Angela Merkel visited India recently, same as the Indian Prime Minister Manmohan Singh visit Germany. Both countries have been working towards gaining permanent seats in the United Nations Security Council. Because of both countries are strong liberal democracies, they have similar objectives. UN reforms, fighting terrorism and climate change, and promotion of science, education, technology, and human rights, are some areas of shared interests, and collaboration between these two countries. Indian and German writers and philosophers, have influenced each other. Recently, Germany has invested in developing education and skills amongst rural Indians. Also of note, during World War II an Indian division known as the Tiger Legion was attached to the German Wehrmacht.


There is not only 30 leader corporations such as Siemens, Volkswagen, Allianz, SAP and BASF listed on the German share index that make the country competitive as per International level, but 10, 000 of small and medium-sized enterprises in manufacturing, in mechanical engineering, supplier industry, and nano & biotechnology, which many a times form clusters. Small and medium-sized enterprises giving employ over 25 million making them the largest employer. They are regarded as major player of the German economy and also provide the majority of apprenticeships for young people. Industry is also an important pillar of the German economy. In comparison with other industrial nations such as Great Britain and the USA it has a broad basis with a strong workforce – 5 million people works in industry. Germany is good command in developing and manufacturing complex industrial goods, primarily capital goods and innovative production technologies. The main important sectors of industry are automotive manufacture, mechanical engineering, electrical engineering and chemicals. These 4 sectors provide work for 2. 9 million people, who produce sales worth of EUR 800 billion. Automotive manufacture is the innovation engine room: Around 30 percent of all internal company spending on R&D is in this sector. With the six manufacturers Audi, BMW, Daimler and Opel (General Motors) Germany, alongside Japan, China and the USA is one of the largest car producers – with a significant share of the upper mid-range and luxury market segments. Nevertheless the worldwide crisis in sales has hit German car manufacturers hard. With a share of a good 13 percent, in terms of sales the almost 6, 000 mechanical engineering companies are in second place after vehicle manufacture. As the largest employer in industry (965, 000 jobs) and the leading export sector, mechanical engineering has a key position in the German economy. The electronics industry is one of the strongest, particularly innovative growth sectors. Over 20 percent of investment by industry in research and development is in the electronics industry. The chemical industry, as a result of takeovers and mergers partially owned by foreign companies, primarily manufactures producer goods. In BASF in Ludwigshafen Germany boasts the world’s largest chemicals company. There are more than 29 million employees working in the service sector – around 12 million in private and public service providers, 10 million in commerce, hospitality and transport, and 7million in financing, leasing, and corporate services. Banking and insurance is a pillar of the service sector. It is concentrated in the leading banking sector in continental Europe, there are mainly three headquarters situated European Central Bank (ECB), the German central bank, and Deutsche Borse


Germany has a huge network of 229 diplomatic missions abroad and maintains relations with more than 190 countries. In 2011[update] Germany is the largest contributor to the budget of the European Union and the 3rd largest contributor to the UN. Germany is a member of NATO, the Organization of Economic Co-operation and Development (OECD), the G8, the G20, the World Bank and the International Monetary Fund (IMF). It has played a leading role in the European Union since its inception and has maintained a strong alliance with France since the end of World War II. Germany is able to advance the creation of a more unified European political, defense, and security apparatus. Main focus on the development policy of the Federal Republic of Germany is an independent area of German foreign policy. It is formulated by the Federal Ministry for Economic Cooperation and Development and carried out by the implementing organizations. The German government sees development policy as a joint responsibility of the international community. It is the world’s 3rd biggest aid donor after the United States and France. During the Cold War, Germany’s partition by the Iron Curtain made it a symbol of East-West tensions and a political battleground in Europe. However, Willy Brandt’s Ostpolitik was a key factor in the detente of the 1970s.



System of government

As we know Germany is Federal Republic. The Federal government, based in Berlin consists of the Federal chancellor and the cabinet of Federal Ministers. Federal elections are held every 4 years. There are 16 governments and thousand of local government. Each state has its own constitution and a state parliament. State elections are held every 4 or 5 year.

Political parties

Germany has 5 major political parties: the Christian Democratic Union (CDU), including the Christian social Union (CSU), the CDU’s sister party: the Free Democratic Party (FDP) the Social Democratic Party (SPD): the Green party and the Left Party. The Left Party is a recently added to Germany’s political landscape. Formed in 2007 from a merger of leftist parties in former East and West Germany, the Left party is largely dominated by former left SPD members.

Recent developments

Recently the Germany federal election was held on 27 September 2009. The CDUCSU secured the highest % of the votes (33. 8%), followed by the SPD (22. 9%), FDP (14. 6%), the left party (12%), and the Greens (10. 71%). The CDU/ CSU and FDP formed a coalition government and the new German Cabinet was sworn in on 28 October 2009. The next federal election must take place by October 2013. Seven of Germany’s 16 states were held election in 2011. In the four state elections was in year 2010, the CDU/CSU has lost ground including major setback in key states of Hamburg and Baden – Wurttemberg, the latter a traditional stronghold of the CDU and FDP for the past 58 years. The Green’s victory in Baden-Wurttemberg has resulted in them controlling four of the six Bundesrat state allocated seats.

Foreign policy

Germany is a strongest supporter of multilateralism and is the 3rd largest contributor to the United Nations budget and largest contributor to the European Union budget. Germany has been elected to the UN Security Council (UNSC) for the 2011-12 terms but continues to seek a permanent seat on a councils. Priority themes for Germany’s UNSC term are nuclear nonproliferation and disarmament, climate change and security and inter cultural dialogue. Germany has taken a leading role on a number of key international issues, including the G20, climate change, energy, the Middle East peace process, and international security. Germany is the EU’s most populous member state (82million) and its largest single economy. It play an increasingly prominent role in all major EU decisions including laying the groundwork for a reworked EU ‘ reform’ treaty signed on 19th Octomber 2007 in lisbon. Germany was the ninth EU member to ratify the lisbon Treaty, on 24 April 2008. The treaty entered into force on 1 December 2009.


Germany has the largest and most powerful economy in entire Europe, and fourth largest by nominal GDP in the world, the biggest net contributor to the EU budget in 2011. The service sector contributes approximately 71% of the GDP, industry 28% and agriculture 1%. The official average unemployment rate in May 2012 was 6. 71%. Germany is an advocate of closer European economic and political integration. Its commercial policies are increasingly determined by agreements among European Union members and by EU legislation. Germany introduced the common European currency, the euro, on 1st January 2002. Its monetary policy is set by the European Central Bank. Two decades after German reunification, standards of living and per capita income remains significantly higher in the states of the former West Germany than in the former East. The modernization and integration of the eastern German economy is a long term process scheduled to last until the year 2019, with annual transfers from west to east amounting to roughly $80 billion in January 2009 the German government approved € 5o billion economic stimulus plan to protect several sector from a downturn and a subsequent rise in unemployment rates. Germany has world’s 500 largest stock market listed companies by revenue in 2010, the Fortune Global 500, 37 are headquartered in Germany. 30 Germany based companies are included in the DAX, the German stock market well known brands are Mercedes-Benz, BMW, SAP, Volkswagen, Adidas, Audi and Nivea. Around 1000 of these companies are global market leaders in their segment.



In article of Walter Wullenweber addressed social issues such as child poverty, unemployment and out of wedlock births. However, unlike many scholars, he does not perceive lack of economic opportunity, but rather lack of education and the failure of underclass persons to embrace middle class values to be the roots of this social problem. In 2006 Beck stated that ” there are far too many people in Germany who see no more hope of improving their situation” and ” many people call it an underclass problem.” Underclass of women may be defined as ” no job, no education, no chance, no husband. They were perceived as unfit mothers who could not provide for their large families. Underclass males were perceived as violent and absent fathers.


Throughout the 20th century, however, women have gradually won victories in their quest for equal rights. Despite significant gains, discrimination remains in united Germany. Women are noticeably absent in the top triers of German businesses. They only hold 9. 2% of job’s in Germany’ upper and middle management positions. Until 2001 women were barred from serving in combat units in the BUNDESHWEHR being restricted to the medical service and the administration.


Germany has one of the lowest birth rates in the world. In 2012, its national fertility rate was 1. 41 children per woman, up slightly from the 2002 rate (1. 31), but still well below the replacement rate of 2. 1 children per woman. Germans are living longer, with a life expectancy of 80. 19 years(77. 93 years for men and 82. 58 years for women).


Some German states have banned Muslim teachers from wearing HEADSCARVES in class. Students are allowed to wear headscarves. All Geerman states have banned crosses from the classroom. Generally the use of all religious symbols by teachers is prohibited in state schools. Students visiting Gymnasium are required to attend religious education or ethics classes. According to the German constitution, church and state are separated in Germany. Thus while classes in religion or ethics are compulsory in a Gymnasium, the student may choose which specific religion.


A century ago, with its world-leading chemical industry and its cadre of top physicists, Germany was widely considered a technological heavyweight. But it has now fallen behind in many areas of emerging technology. The German biotech industry, for example, started much too late (it hardly existed until the mid-1990s) and is still trying to make up ground. And while German universities are doing excellent research on nanotechnology, many worry that the country will not turn that basic science into products. Germany’s greatest strength is its automobile industry. In the years to come, many emerging technologies, from optical communication links to nanotech materials, will find their way into cars. Technological innovation will be critical to creating the opportunities that will lead German carmakers and their suppliers out of their current trouble. In particular, German carmakers are betting on computer-based assistance systems that could make driving safer and more comfortable. The basic idea is that a car would map information from a variety of sensors, like cameras and radars, into a digital model of the surrounding traffic conditions. In case of danger, the system would issue a warning to the driver. In more-advanced systems, vehicles could use wireless communications to inform each other in real time about oil puddles, traffic jams, or accidents. BMW is working on wireless networks for cars that will automatically set up connections among vehicles in order to exchange critical sensor information; a car that detects a slippery stretch of pavement, for instance, could relay that information to other cars on the same road. The goal is to create networks of intercommunicating cars that could someday form a sort of automotive Internet.


Atmosphere and changes in climate system are among the greatest environmental and political challenges of 21st century. Climate change, which has largely been caused by human activity, is the global challenge. In the international arena, Germany is a forerunner in climate and energy policies and seeks to achieve ambitious emission-reduction goals. With the 2011 decision to opt out of nuclear energy and to decommission the last nuclear power station by 2022 at the latest, Germany is sending out a signal that has been respected thought the world. Industrialization has taken its toll on Germany’s environment, including that of the former GDR, which, according to a 1985 UNESCO report, had the worst air, water, and ground pollution in Europe. Since 1976, the Petrol Lead Concentration Act has limited the lead content of gasoline; for control of other automotive pollutants, the government looked toward stricter enforcement of existing laws and to technological improvements in engine design. The Federal Emission Protection Act of 1974, based on the ” polluter pays” principle, established emissions standards for industry, agriculture and forestry operations, and public utilities. Nevertheless, by 1994, 50% of Germany’s forests had been damaged by acid rain. Germans support protecting the environment, and they have a special relationship with nature. They like animals and plants, blue skies and the ocean. They want their children to grow up in an intact environment, and try to set an example for others. When it’s time to save the world, the Germans are there, doing their utmost. They are determined that conservation efforts won’t fail because of them.


The German legal system is a civil law based on a comprehensive compendium of statutes, as compared to the common law systems. Germany uses an inquisitorial system where the judges are actively involved in investigating the facts of the case, as compared to an adversarial system where the role of the judge is primarily that of an impartial referee between the prosecutor and the defendant. The independence of the judiciary of Germany is historically older than democracy in Germany. The organisation of courts is traditionally strong, and almost all state actions are subject to judicial review. Judges follow a distinct career path. At the end of their legal education at university, all law students must pass a state examination before they can continue on to an apprenticeship that provides them with broad training in the legal profession over two years. They then must pass a second state examination that qualifies them to practice law. At that point, the individual can choose either to be a lawyer or to enter the judiciary. Judicial candidates start working at courts immediately; however they are subjected to a probationary period of up to five years before being appointed as judges for lifetime. Germany’s legal system is a civilian system whose highest source of law is the 1949 German Constitution, which sets up the modern judiciary, but the law adjudicated in court comes from the German Codes; thus, German law is primarily codal in nature. The court system adjudicates (1) public law (offentliches Recht), that is, administrative law (civil-government litigation or litigation between two government bodies) and criminal law, and (2) private law (Privatrecht). German law is mainly based on early Byzantine law, specifically Justinian’s Code, and to a much lesser extent the Napoleonic Code. German law is not impregnated with legal positivism to the extent of Napoleonic legal systems, so Germany’s judiciary is not subordinated to the legislature, and decisional law has greater importance, though not to the extent of common law systems. The court system is inquisitorial, thus judicial officers personally enter proof and testimony into evidence, with the litigants and their counsel merely assisting, although in some courts evidence can only be tendered by litigants.



Germany has the most prominent history of automotive industry in the world as the country is considered to be the birthplace of the automobile in late 1870s, and it is also the home to many world-famous and popular car brands, such as Mercedes-Benz, BMW, Volkswagen, and Porsche and so on. Germany is having an annual output near 6 million and a 35. 6% share of the European Union now and it is the absolute leader of auto production in Europe since the 1960s. Germany was the third in automobile manufacturing during 1970s – middle of 2000s in the world and it is fourth now after China, United States and Japan. Last year marked the 125th anniversary of the birth of the automobile in Germany. Cars designed in Germany won in the European Car of the Year, the International Car of the Year, the World Car of the Year annual awards one of the most times among other countries. Two cars (Volkswagen Beetle and Porsche 911) took 4th and 5th places in the Car of the Century award. Karl Benz and Nikolaus Otto independently developed four-stroke internal combustion engines in the late 1870s, with Benz fitting his design to a coach in 1887, which led to the modern day motor car. By 1901, Germany was producing about 900 cars a year. In 1926, Daimler-Benz was formed from the predecessor companies of Karl Benz and Gottlieb Daimler and produced cars under the marque of Mercedes-Benz. In 1916 BMW was founded, but didn’t start auto production until 1928. Currently, six German companies dominate the automotive industry in the country: Volkswagen AG, BMW AG, Daimler AG, Dr. Ing. h. c. F. Porsche AG, Adam Opel AG and Ford-Werke GmbH. Nearly six million vehicles are produced in Germany each year, and approximately 5. 5 million are produced overseas by German brands. The Volkswagen Group is one of the three biggest automotive companies of the world along with Toyota and General Motors. The Chevrolet Volt and its Voltec Technology have been invented and developed first and foremost by the former German Opel engineer Frank Weber still today some of the most important parts of the development of GM’s electric vehicles are done in Germany. According to the report of Germany Trade and Invest Organisation (GTAI), here are some numbers and facts to showcase the significance of automotive industry in Germany: Germany has the largest automobile market in Europe in terms of production and sales, which recorded 5. 5 million passenger vehicles manufactured and 2. 9 million registrations in 2010, The average manufacturer and supplier turnover of more than EUR 300 billion since 2005, In 2009, the automotive sector in Germany recorded turnover of EUR 263 billion, which was about 20% of total German industry revenue. 2. 2 ROLE OF AUTOMOBILE INDUSTRY IN GERMAN AUTO SECTORThe automotive industry is the largest industry sector in Germany . In 2009, the auto sector recorded turnover of EUR 263 billion –around 20 percent of total German industry revenue. The German auto sector recorded foreign market-generated revenue of EUR 150. 7 billion for the year2009. For the same period, domestic market-generated revenue of EUR 112. 5 billion was created. The automobile industry is one of the largest employers in Germany, with a workforce of around 723, 000. Germany is Europe’s number one automotive market in terms of production and sales: accounting for over 35 percent of all passenger cars manufactured and almost 30% of all new registrations. Germany also hosts the largest concentration of OEM plants in Europe. There are currently 30 OEM sites which are producing for major auto brands. In 2009, German automobile manufacturers produced more than 10. 4 million vehicles – equivalent to 17 % of worldwide production. Germany is the European car production leader: some 4. 9 million passenger cars were manufactured in German plants in 2009. Around 70 % of cars produced in Germany are ultimately destined for foreign shores . Germany’s automotive sector is the country’s most innovative industry sector, accounting for36. 5 % of total German industry R&D expenditure of EUR 57. 4 billion. R&D expenditure increased by 4. 4 % to EUR 20. 9 billion in 2009 – helping consolidate Germany’s globally leading position after the world economic crisis.


The automobile industry is one of the largest employers in Germany with a workforce of around 723, 000. Germany is Europe’s number one automotive market in terms of production and sales for over 35 % of all passenger cars manufactured and almost 30 % of all new registrations. Germany is the largest concentration of OEM (Original Equipment Manufacturer) plants in Europe. There are currently 30 OEM (Original Equipment Manufacturer) sites which are producing for major auto brands. Germany is the European car production leader: passenger cars and trucks, buses were manufactured in Germany. New and innovative products are made to the highest possible technological standards. With an average of 10 patents registered per day, Germany is the leader in auto industry patents. Around half of these patents are related to environmentally friendly technologies. Efficiency and Alternative Drive Systems In Germany, automotive engineers are hard at work improving internal combustion engine energy efficiency, developing alternative drive technologies (like electric, hybrid and fuel cell cars), and adapting lightweight materials and electronics. There are several German companies dominate the automotive industry in the country: Volkswagen , BMW , Daimler , Porsche, Adam Opel and Ford-Werke GmbH. Nearly 6 million vehicles are produced in Germany each year. Germany is one of the top 4 automobile manufacturers in the world. The Volkswagen Group is one of the three biggest automotive companies of the world (along with Toyota and General Motors).




The German automotive industry has a decisive influence on the development of entire German economy. Its activities clued the manufacture of Automobiles and their 19ines, the production of trailers, specialized vehicle bodies and containers and also vehicle parts and accessories. The innovative capacity and economic importance of the Automotive industry make it a key player in Germany. The development, production, sale and use of he automobile account for an essential proportion of the overall revenue and employ-ment generated by the German economy as a whole. The automobile is the outcome of a production process based on the division of labour and characterized by complex interactions that bring together the services of almost all sectors of the economy in a common aim. The importance of the automotive industry as the hub of this economic network therefore derives not only from vehicle production in itself but also from the knock-on effects of the economic sectors involved both upstream and downstream of production. With its stringent demands on manufacturing technology and on the technical standard and quality of upstream products and services. the automotive Industry . under the pressure of International competition acts as a driving force for innovation and technical progress in numerous other sectors of the economy.


The innovation campaign of the German automotive industry has been responsible for creating 110, 000 new jobs over the last five years. By the end of 2001, almost 770, 000 people were employed in the automotive industry. However, the number of people employed directly in the automotive industry is only a small proportion of the total number of people whose job depends on automobile production. Due to the further slimming down of production processes and the resulting concentration of automobile manufacturers on their core production, the distribution of output between vehicle manufacturers, suppliers and primary suppliers is changing. The reduced depth of production has resulted in an increased and varied demand for upstream products and services, so that numerous other sectors participate indirectly in generating value added in automobile production. Investment goods and the materials and parts supplied during ongoing production are procured from a wide range of sources, including the chemicals industry, textile industry, mechanical engineering, electrical engineering, steel drawing works, cold rolling mills and the iron production industry. In addition, service sectors such as design offices, forwarding agents and transport companies also play their part in the creation of an automobile; overall, a total of about a million people work for the automotive industry in the upstream industries


However, the employment effect of the automobile does not stop there: in fact it even goes much further. For example, 3. 35 million people owe their job directly to the use of the automobile (e. g. motor trade, vehicle maintenance and repair and filling stations). In addition, automobile users have recourse to other services, such as those provided by banks, insurance companies or public authorities, to name but three. Then there are the jobs linked to the use of road vehicles in freight and passenger transport (e. g. road haulage and taxi companies). When all these jobs are added to those in the automotive industry itself, we find that one in seven jobs in Germany depends directly or indirectly on the automobile. Overall, in 1998, more than 5 million people were employed in automobile-related jobs.


The gross output obtained from the development, production, sale and use of the automobile accounted for almost one fifth of gross national product in 2001. The resulting taxes paid into state coffers amounted to more than 120 billion euros, almost a quarter of Germany’s total tax revenue. Automobile-specific taxes alone – i. e. the mineral-oil tax, VAT on the mineral-oil tax, road tax and the road user tolls for heavy goods vehicles -netted the German tax office about 50 billion DM..


The German automotive industry earned a turnover of 202 billion euros in 2001. Roughly 69% of this figure came from the manufacturers of vehicles and their engines, just over 3% from the manufacturers of trailers, specialized vehicle bodies and containers and 28% from the vehicle parts and accessories industry. As a result, the automotive industry alone, as one of the biggest industrial sectors in Germany, accounted for a sixth of the country’s total industrial turnover. With 121 billion euros, roughly 60% of the automotive industry’s turnover was obtained from, operations with countries outside Germany.


In 2001, the German automotive industry was again able to strengthen its position on most markets worldwide. In response to increased demand for its innovative, high-quality and therefore competitive products, it expanded Its production both inside and outside Germany. World-wide, German manufacturers produced 10. 0 million vehicles, corresponding to an increase of 3% over the year 2000. This figure included just under 9. 2 million passenger cars and 840, 000 commercial vehicles.


The automotive industry continues to top the ranking of German export industries. In 2001, the automotive industry exported 3. 64 million cars and 276, 000 commercial vehicles. German automobile exports attained a total value of 128 billion euros. Over half of these vehicles were delivered to partner states in the European Union. Mean while, automobile imports over the last year amounted to 57 billion euros. The balance of trade in the automotive sector therefore resulted in a surplus of more than 71 billion Euros for Germany. Over the last year, trade with the United States of America continued to grow. The German export volume rose by 9% compared to the year 2000, to a good 20 billion euros. By contrast, imports stood at just under 3 billion euros. The German American balance of trade in the automotive sector, with a surplus of 17 billion euros, is therefore particularly positive for Germany. Eastern Europe is becoming an increasingly important trading partner in the automotive sector. The German automotive industry exported products worth almost 14 billion euros to Eastern Europe, whilst at the same time a fifth of all German automobile-specific imports, to a value of a good 11 billion euros, came from there.


The international competitiveness and therefore also the long-term sales prospects of any industry depend essentially on its investment levels. In 2001, the gross outlay of the German automotive industry for plant and equipment in western Germany amounted to 9. 4 billion euros. The automotive industry therefore accounted for a fifth of total industrial investment in Germany. Roughly half of the total investment last year went into expansion and restructuring, followed by investments in rationalization and equipment replacement (30%). This year, the German automotive industry again intends to increase its investment in Germany. Given the drastically increased requirements of international competition, German manufacturers have increased their direct investment outside Germany as part of their globalization strategy and also under the pressure of high costs at home. Since the proportion of output generated outside Germany is generally supplemented by assemblies and parts supplied from Germany, these foreign investments also help to increase the output of domestic production.


Last year, the German automotive industry spent 14 billion euros on research and development (R&D). This figure represents a third of total R&D spending in the economy as a whole. As a result, the automotive industry leads all other economic sectors in the Federal Republic, a long way ahead of IT manufacturers and the chemicals industry. By comparison, in 1991, the companies of the German automotive industry spent only 5 billion euros on R&D, corresponding at the time to a share of 18% of research spending in the economy as at whole. As a result of this forward looking strategy, the number of patent applications in German road vehicle manufacture is also continuously increasing. according to the latest statistics, companies domiciled in Germany in the automobile construction sector have applied for 4, 300 patents. This figure again tops the world rankings and is much higher than for the competition, for example from the USA (3, 200) or Japan (3, 100). 30% of all patent applications came from companies in German road vehicle construction.



There is No any other country in Europe can have concentration of auto related R&D, design, supply, manufacturing and assembly facilities. Accordingly, there is no other country in Europe provides the same market opportunities as those offered by the German auto industry. The auto industry in Germany thrives as a result of the diversity of companies active in the sector: Germany has large and medium-sized auto manufacturers; they are system and module suppliers, not to mention numerous small and medium-sized tier 2 and 3 suppliers. In fact, around 85 % of auto industry suppliers are of medium-sized companies. All of these suppliers provide up to 70 % of value added within the domestic auto mobile industry, ensuring that the German auto industry remains at the forefront of the competition. Value added is moving to the supplier side, and increasingly also to non auto industry sectors (e. g. the chemical industry in electro mobility). Not unsurprisingly, international suppliers are increasingly attracted to Germany as a business location. To date, the world’s ten largest non- German auto industry suppliers have successfully established operations in Germany.



Country2011-20122012-2013(Apr- Dec)GERMANY7, 809, 529. 215, 929, 570. 79India’s Total Import

234, 546, 324. 45

197, 752, 416. 05


S. No. Country2010-20112011-20121GERMANY3, 071, 853. 523, 796, 531. 89

India’s Total Export

114, 292, 192. 18

146, 595, 939. 96


The Indian Automobile Industry is manufacturing over 11 million vehicles and exporting about 1. 5 million every year. The dominant products of the industry are two wheelers with a market share of over 75% and passenger cars with a market share of about 16%. Commercial vehicles and three wheelers share about 9% of the market between them. About 91% of the vehicles sold are used by households and only about 9% for commercial purposes. The industry has attained a turnover of more than USD 35 billion and provides direct and indirect employment to over 13 million people. Interestingly, the level of trade exports in this sector in India has been medium and imports have been low. However, this is rapidly changing and both exports and imports are increasing. The demand determinants of the industry are factors like affordability, product innovation, infrastructure and price of fuel. Also, the basis of competition is the sector is high and increasing and the life cycle stage is growth. With a rapidly growing middle class, all the advantages of this sector in India are yet to be leveraged. Note that, with a high cost of developing production facilities, limited accessibility to new technology and soaring competition, the barriers to enter the Indian Automotive sector are high and these barriers are study. On the other hand, India has a well-developed tax structure. The power to levy taxes and duties is distributed among the three tiers of Government. The cost structure of the industry is fairly traditional, but the profitability of motor vehicle manufacturers has been rising over the past five years. Major players, like Tata Motors and Maruti Suzuki have material cost of about 80% but are recording profits after tax of about 6% to 11%.