Baden-Württemberg's auto sector fights for survival amid electric vehicle surge
The automotive sector in Baden-Württemberg is facing growing financial strain as the shift to electric vehicles accelerates. Trade associations have now set out urgent demands for the incoming state government, warning that workshops and dealers are struggling with razor-thin profits and rising insolvencies. The calls come amid a broader decline in maintenance work and a shrinking market for traditional combustion-engine cars.
Last year, major insolvencies in Germany's auto retail sector tripled, climbing from 11 to 32 cases. In Baden-Württemberg alone, overall business insolvencies rose by 11% in 2025, reaching 2,706 filings—slightly above the national increase of 9.6%. While exact figures for the automotive trade were not broken down, local dealer groups pointed to weak economic conditions and falling new car registrations as key pressures.
The region's automotive businesses are operating on tight margins, with average profits barely exceeding 1%. This squeeze comes as Germany's vehicle fleet nears saturation at 49.6 million passenger cars, reducing workshop visits and maintenance demand. Electric vehicles, which require about a third less servicing than conventional models, are adding to the challenge. Nationwide, combustion-engine cars now account for just 41% of new registrations, while purely electric models surged by 43% to 545,000 units last year. In Baden-Württemberg, one in three new cars is electric, and one in five runs entirely on batteries. To ease the strain, the state's automotive trade association has urged the new government to introduce a funding strategy for electric mobility that includes the used car market. Other demands include raising the master craftsman's bonus to at least €3,000, ensuring independent workshops retain access to vehicle data, and overhauling the EU's planned consumer label for used cars.
The association's proposals aim to support workshops and dealers as the industry transitions away from internal combustion engines. Without intervention, the sector risks further financial instability, with low profit margins and declining service revenue already pushing many businesses to the brink. The incoming government's response will shape whether the region's automotive trade can adapt to the changing market.
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