Finance
German car exports to China plunge by a third in 2025, says economic institute
Published by Global Banking & Finance Review®
Posted on February 24, 2026
2 min readLast updated: February 24, 2026
Quick Summary
IW says German car and parts exports to China fell by about a third in 2025 to under €14bn, over half below the 2022 peak. U.S. tariffs, weak EU demand, the EV shift and China’s price war add pressure as Chancellor Merz visits China.
German Auto Exports to China Sink by One-Third in 2025, IW Finds
Germany-China Auto Trade Overview
BERLIN, Feb 24 (Reuters) - German car exports to China plunged by roughly a third in 2025, extending a steep decline that has wiped out more than half the sector's shipments since their 2022 peak, according to a study released by the German Economic Institute (IW) on Tuesday.
Key Export Figures
Exports of cars and parts fell to under 14 billion euros ($16.49 billion) last year, down from nearly 30 billion euros three years earlier, underscoring the rapid erosion of Germany's foothold in its most important foreign market.
Rising China Competition
EV Transition Costs
Tariffs and Weak Demand
Headwinds for Carmakers
Carmakers — which make up Germany's largest industrial sector — are facing their toughest test in decades, squeezed by higher U.S. import tariffs, weak demand in Europe, a costly transition to electric vehicles and an intensifying price war in China.
Political Context: Merz’s China Visit
The IW data comes as Chancellor Friedrich Merz travels to China for the first time, a closely watched trip expected to shed light on how Europe's biggest economy seeks to recalibrate ties with its largest trading partner amid mounting competitive and geopolitical strains.
Exchange Rate Note
($1 = 0.8490 euros)
Writing and Editing Credits
(Writing by Friederike Heine, Editing by Linda Pasquini)
Key Takeaways
- •IW study finds German car and parts exports to China fell by about one-third in 2025 to under €14bn.
- •Shipments are now more than 50% below their 2022 peak, highlighting a steep multi‑year decline.
- •Headwinds include higher U.S. import tariffs, weak European demand and the costly EV transition.
- •An intensifying price war in China is eroding German brands’ market share and pricing power.
- •Chancellor Friedrich Merz’s first China trip aims to recalibrate ties amid trade and geopolitical strains.
Frequently Asked Questions about German car exports to China plunge by a third in 2025, says economic institute
1What is the main topic?
A new IW study reports that German car and parts exports to China plunged by roughly a third in 2025, extending a multi‑year decline from the 2022 peak.
2Why did German car exports to China drop?
Higher U.S. tariffs, softer European demand, the costly transition to EVs and fierce price competition in China have eroded Germany’s auto export competitiveness.
3How large were exports in 2025?
Exports of cars and parts to China fell to under €14 billion in 2025, down from nearly €30 billion in 2022, more than halving over three years.
