Catch-Up Transformation in Crisis? Decarbonization and Financialization in the German Auto Industry

Résumé:

The German automotive industry is in a serious crisis: in recent months, numerous companies in Germany have cut jobs, and some suppliers have already closed their first plants. At the same time, business in China, traditionally a strong market, is also weakening, and exports to the United States have declined due to US tariff policy. This article develops the thesis that the current crisis in the German automotive industry is a crisis of the path of catch-up transformation, which is significantly influenced by the dynamics of financialization and has far-reaching implications for the future prospects of companies and their workforces.

Based on longitudinal case studies, the temporal dynamics of the transformation activities of German automotive companies are reconstructed. Three distinct phases are identified: (1) In the first phase (until 2015), adherence to established technologies (combustion engines) and the established innovation model (incremental) resulted in a considerable lag compared to innovative players such as Toyota (hybrid vehicles), Tesla (battery electric cars), and new Chinese carmakers (digital vehicle architectures). (2) In the second phase (2015-2023), a “firework of investment” established the path to the catch-up transformation, which (3) has fallen into a deep crisis in the current phase (since 2024): A large proportion of the innovation projects that were intended to reduce the lag from the end of the 2010s onwards are currently being discontinued.

By reconstructing the phase dynamics of the path of catch-up transformation, this article goes beyond the widespread diagnoses of individual management failure and technological path dependency. First, the case studies of carmakers and suppliers show the varying influences of financialized corporate governance on the path of catch-up transformation in the three phases (on the adherence to the combustion engine until the 2010s, on the “investment boom” since the mid-2010s, and on the discontinuation of innovation projects from 2024 onwards). Rising profitability expectations, governance by financial indicators and shareholder value orientation limited played a key role in both constituting the path of catch-up transformation and its current crisis. Secondly, it highlights the consequences that the different dynamics of catch-up transformation had on employees in automotive companies. Financialized corporate governance resorted to various means of externalization to establish a security net for the company’s profitability.

Methods. Empirically, the article is based on four longitudinal case studies of companies. The author has been conducting research in the carmakers and supplier companies since the financial crisis of 2006/7. As part of various research projects, hundreds of qualitative interviews were conducted with management representatives, executives, production workers, and interest groups.