Our figure of the month 02/2021: Regional wealth effects of vehicle manufacturing

28.01.2021

Germany's business model is based on the production of export goods. Alongside mechanical engineering and the chemical industry, the automotive industry is one of Germany's strongest exporters and is also highly regionally concentrated. Partly because of its focus on exports, the strong economic focus on vehicle manufacturing has repeatedly come under criticism. At the latest since the emissions scandal became known in 2015, the future viability of the industry has also been questioned.

The contribution of vehicle manufacturing to the development of prosperity in the 96 spatial planning regions of Germany can be derived from regional wage incomes. The median wages of the employment history of the Federal Employment Agency are used as the data basis. Combined with the region- and industry-specific values for employment figures, hypothetical wage totals can be calculated and, in turn, the industry-specific growth contributions to wage totals can be calculated with the result. The figure shows the calculated growth contributions of vehicle manufacturing to the hypothetical wage totals across industries for those ten spatial planning regions that have the highest share of employees in the industry. The growth contributions are shown for the time interval before the emissions scandal (2012–2015) and after (2015–2019). In addition, the corresponding employee shares are shown at the end of the respective interval (2015 [&] 2019).

In almost all regions, the growth contributions of vehicle manufacturing are higher in the period before the emissions scandal than in the subsequent interval. For example, in Ingolstadt, the contribution of vehicle manufacturing to overall wage growth drops from 50 to 35%. However, even after the emissions scandal, the contribution to growth is higher than the share of employees (25%), indicating a continued positive effect of the industry focus for the region. The situation is similar in the Braunschweig regional planning region – to which Wolfsburg belongs. In the other regions, the prosperity effect is less clear-cut. One exception is Stuttgart, where the growth contribution is comparatively constant at around 15% with an employment share of around 9%.

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