The global automotive sector is undergoing a revolution driven by electrification, autonomy, and competition from Asia. Traditional Western European powerhouses such as Germany and Italy face the challenge of losing market share in recent years, battling overcapacity, and having to invest in innovation. A new report by the Institute for European Policy Research (IEP@BU) compares the strategies of both countries since 2000, highlighting disparities in production and research. Germany, despite a 20% decline from its peak, maintains its lead thanks to a focus on premium brands and technology. Italy, with an 80% collapse in passenger car production, relies on suppliers and commercial vehicles — but these are fragile foundations.
Since the turn of the millennium, Germany experienced its "golden age" of automotive manufacturing: after the 1993 crisis, production rose to 5 million cars per year, stabilizing at 4.1 million after the pandemic. Global presence, dominance in the premium segment, and technological leadership — these are the pillars of success for Volkswagen Group and BMW. Crises (the 2008 financial crisis, the pandemic) caused declines, but recoveries were swift. In 2024, Germany produced 1.35 million electric vehicles — one-third of total production, replacing combustion engines (now at 1960s levels).
Italy took a different path and saw a decline from 1.6 million to 310,000 passenger cars in 2024, having depended on mass production and the domestic market. Fiat Chrysler (now Stellantis) focused on budget models, ignoring the premium segment beyond Ferrari and Lamborghini. The Chrysler acquisition opened the U.S. market but did not halt the erosion. Commercial vehicles served as a stabilizer. Their share rose from 18% (2000) to 47% (2024), although in 2024 it fell by 15%. The acquisition of Iveco by India's Tata Group signals a loss of control over key players in Italian industry.
A comparison of factory utilization rates revealed the following disparities. In Germany, the average was 67% (75% excluding Ford), close to the 80% profitability threshold. Italy — a dramatic 47%, with two plants below 20%.
Eurostat data shows recoveries after crises, with a peak in 2022. In Italy, value added returned to 2000 levels by 2017, with smaller declines — suggesting the strength of suppliers over carmakers. Yet innovation determines the future. Transnational patents (IW database, 2010-2022) measured by inventor location — Germany dominates: 26% of all transnational patents in the industry are automotive (Italy less than 8%). For every Italian patent, there are 5.4 German ones overall, but in automotive — as many as 18!
Germany has its capital buffer, but the revolution will not forgive complacency. Italy must rebuild its innovative capacity to avoid marginalization.
