German car exports to China plunge by a third in 2025, says economic institute

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.

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. 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.

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. 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. ($1 = 0.8490 ‌euros) (Writing ‌by Friederike Heine, Editing by ​Linda Pasquini)