BERLIN, June 5 - German automotive firms lost market share at the start of the year as a mix of tariffs, geopolitical tensions and rapid technological change weighed on sales, according to an EY analysis that cautions of continued strain ahead.
The EY study found that revenue across the world's largest auto groups increased by 2% in the first quarter. That overall gain was led by Japanese and U.S. manufacturers. In contrast, German carmakers recorded a 4% decline in revenues during the same period.
EY sector specialist Constantin Gall framed the situation as a deep structural shift within Germany's auto industry. "The entire German automotive industry is undergoing a profound structural transformation," he said, pointing to several concurrent pressures: losses in important export markets including the U.S. and China, costly overcapacity, substantial investments in software, and the slow pace at which electric mobility is being scaled up.
The analysis also highlights geopolitical risk. The Iran crisis has injected fresh uncertainty into markets, and EY expects that higher fuel prices combined with inflationary pressure will dampen consumer demand in Europe. That dynamic adds a near-term demand risk that could exacerbate existing operational and strategic challenges for manufacturers and suppliers.
Summarizing the outlook, Gall warned that the downturn is unlikely to be brief. He said, "2026 will be another crisis year for the automotive industry," signaling that industry participants should prepare for prolonged headwinds rather than a rapid recovery.
The EY findings underscore a contrast between global winners and the German sector's difficulties. While aggregate revenue growth was modestly positive for major auto groups overall, the domestic German cohort faced declines driven by a combination of market share losses abroad, elevated structural costs and the need to fund a costly technological transition.
Impacted sectors: vehicle manufacturers, automotive suppliers, software development for vehicles, and European consumer markets.