In a striking reversal, Germany's auto industry is simultaneously shuttering domestic plants and importing record numbers of Chinese-made cars. According to a report by the Chinese outlet Huxiu, German car imports from China surged 120.9% in the first seven months of 2025, reaching 175,000 vehicles and making China Germany's largest source of imported cars for the first time.
German automakers' crisis
Volkswagen closed its "Transparent Factory" in Dresden on December 16, 2025, after producing its last car. The factory, which opened in 2002 to build the Phaeton luxury sedan, will now be used for AI, robotics, and chip research. This marks the first closure of a Volkswagen plant in Germany in the company's 88-year history.
Volkswagen plans to cut 19,000 jobs in Germany by the end of 2026 and reduce its global workforce by about 50,000 by 2030, roughly one-sixth of its German employees. Global annual production capacity will drop from 12 million to 9 million vehicles. Mercedes-Benz warned in September that it may close one assembly plant and one powertrain plant in Germany due to high labor costs, while BMW has agreed with unions to cut about 8,000 jobs globally by 2027.
These cuts have triggered nationwide protests by the IG Metall union, reminiscent of the post-war reconstruction period.
The Chinese-made Audi phenomenon
Meanwhile, German consumers are eagerly buying Chinese-made electric vehicles (BEVs). The AUDI E5 Sportback, a battery-electric coupe developed jointly by Audi and SAIC specifically for the Chinese market, has become a hot commodity in Germany. A parallel importer, Auto China, is selling the E5 Sportback and its sibling E7X in Germany, despite Audi's legal action against the importer for bypassing official channels.
The E5 Sportback's Chinese guide price ranges from 235,900 to 319,900 yuan (about $33,200 to $45,100), before taxes and incentives. In Germany, the importer sells it for 59,980 euros, roughly double the Chinese starting price. Yet Germans are still buying it, attracted by its "fresh design and digital cockpit experience," as praised by German magazine AUTO BILD.
The car's key components - the electronic architecture, Qualcomm Snapdragon 8295 cockpit chip, Momenta driver assistance system, CATL battery, and 800V platform - are all Chinese-supplied. This highlights how Chinese technology now underpins even Audi's most talked-about electric model.
The situation reflects a broader shift: German automakers, once the teachers of China's auto industry, are now learning from Chinese supply chains and development speed. Audi says its partnership with SAIC has cut product development cycles by 30%. As German brands struggle with high costs and slow innovation, Chinese EVs are filling the gap, a trend that shows no sign of reversing.
