Each car produced in Germany carries an average labor cost of up to $3300, which includes wages, pension contributions and other benefits. In comparison, the same costs in the United States amount to about $1340, while in Morocco they are the lowest, at just $106 per vehicle.
A new study by consulting firm Oliver Wyman has revealed a major challenge facing German carmakers: extremely high labor costs. Each car produced in Germany carries an average labor cost of up to $3300, which includes wages, pension contributions and other benefits. By comparison, the same costs in the United States amount to about $1340, while in Morocco they are the lowest, at just $106 per vehicle.
With tariffs on foreign car imports in the United States, more and more manufacturers are considering moving some of their production within American borders. Among them is Audi, for which this would be its first factory in the United States. However, avoiding tariffs is not the only reason to consider moving production outside of Germany; rising local labor costs have become a significant threat to the sustainability of the German car industry.
The Finance Ministry plans to change tax regulations to make buying an all-electric car more attractive for companies in Germany. The special regulation is intended to apply to purchases between July 2025 and December 2027. Companies that buy a new electric car for business use in Germany should be able to deduct 75% of the costs from their taxes in the year of purchase, according to a draft law made available to dpa in Berlin.
Meanwhile, in an alarming situation for the auto industry, executives at some of the world’s largest car companies, including General Motors, Toyota, Volkswagen and Hyundai, have raised serious concerns about a shortage of rare earth magnets from China. They are essential for the production of components such as engines, alternators, sensors and security systems. China, which controls over 90 percent of global capacity for processing these magnets, has imposed new export restrictions, requiring companies to obtain permission from Beijing to export these materials.