The strike by 413,000 German auto workers demands a 5% raise over 12 months, while employers are willing to offer only 2.3%—and admit that "only 20% of companies are truly in good shape." In an industry where costs are already too high to survive, workers demand more while companies need less—this itself is a deadlock.

German Auto Workers' Wages Are 5 Times Those in China

First, look at how brutal the cost gap is. Volkswagen internal documents show that workers at German plants earn 74 euros per hour, versus 12 euros at its Tianjin plant in China; annual effective working hours are 1,282 in Germany versus 2,065 in Tianjin; the ex-factory cost per vehicle at the Emden plant is 4,850 euros, versus only 1,078 euros in Tianjin—a 4-fold difference.

Oliver Wyman's data is even more direct: labor cost per vehicle is 3,300 dollars in Germany and 585 dollars in China—5.5 times higher. Germany's annual automobile output has fallen from 6.06 million vehicles in 2016 to 4.10 million in 2024, evaporating by one third in a decade. A strike-driven 5% raise is like cutting another slash into an already bleeding wound.

Germany's Automotive Supply Chain Costs Twice as Much as China's; China-Made EVs Are Half the Price of German Ones

The supply chain gap runs deeper than labor costs and is harder to reverse. Germany's "auto pope" Dudenhöffer said bluntly that Europe lags China by 20 years in battery technology. China's power battery costs are 30% lower than Europe's, and R&D cycles are 50% shorter. By 2025, more than 70% of batteries in EVs sold in Europe will be supplied by Chinese companies.

Volkswagen itself admits that producing EVs in China costs up to 50% less than in Germany, because battery procurement, R&D cycles, and labor efficiency combine to create a systemic advantage. Germany is raising wages, while China is compressing the time and capital across the entire chain—from ore to battery cells to finished vehicles rolling off the line. The two forms of competition are not on the same dimension at all.

German Automakers' Sales in China Are Falling, While Chinese Automakers' Share in Europe Climbs Year by Year

Sales data have already pronounced the end of the old order. Annual deliveries of the German Big Three in China fell by about one third from 2019 to 2025, to 3.87 million vehicles; in 2025, Germany's exports of automobiles and parts to China halved from nearly 30 billion euros three years earlier to less than 14 billion euros.

In Europe itself, Germany's market share fell from 35% in 2019 to 27% in 2024, while Chinese brands' full-year share of Europe's EV market has reached 11%—double that of 2024. What German automakers are losing is the entire front line—from China to Europe, from home to exports.

For Germany's Auto Industry, Shifting from a Manufacturing Center to Brands and Engineering Is the Only Way Out

The strike will not "destroy" Germany's auto industry; it merely makes an already ongoing process more expensive, more painful, and harder to reverse. There is only one way out for German automakers: accelerate the relocation of R&D, procurement, and manufacturing out of the high-cost home base, as Volkswagen is doing, and use China's speed and cost structure to keep themselves alive.

But this means Germany's domestic auto industry will gradually degrade from a "manufacturing center" into a "brand and engineering headquarters," and the loss of jobs and output value will not stop just because a pay raise agreement is reached.

Final Thoughts

Twenty years from now, Roland Berger predicts that Chinese domestic OEMs will hold 25%–34% of the global market share, and global BEV penetration will reach 68%. China's auto industry is not a "catch-up player" but one of the rule-makers—defining what a "competitive EV" is in batteries, electric drive, intelligentization, and cost efficiency. Germany will still build good cars, but the profit pool for good cars will increasingly tilt toward Chinese supply chains and Chinese brands. A strike-driven 5% raise cannot change this direction; it only makes every step heavier for German cars as they move toward that endgame.