When you first arrive in Wolfsburg by train, the city gives you a quick overview of everything. With four chimneys piercing the gloomy sky and the enormous VW logo gazing back at you with the serene assurance of a place that believed it would always matter, the Volkswagen plant stretches along the canal like a wall. That was the case for seventy years. Now, in late 2025, the same streets feel different. Not quite panic. It’s more akin to a gradual release that no one is quite sure how to describe.
Wolfsburg, Munich, and Stuttgart are more than just cities. They are actually the backbone of post-war Germany’s economy. Nearby in Ingolstadt are Mercedes, BMW, Volkswagen, Audi, Bosch, ZF, and a group of suppliers who made fortunes through accuracy. The math was easy for decades. With the easy confidence of people who had never truly seen the bottom of the well, mayors planned new tram lines, new daycare wings, and new cultural quarters while large factories paid large trade taxes and city budgets grew. As recently as 2023, Wolfsburg and Ingolstadt were among the top five European regions in terms of GDP per capita. People are still taken aback by that detail.
It is more difficult to characterize the current situation than a “downturn.” Stuttgart ended the previous year with a budget deficit of €785 million. The deputy mayor, Dorothea Deneke-Stoll, used the term “deep financial crisis” on the record, which is not something German municipal officials say lightly. As a result, Ingolstadt is preparing for trade tax revenues that are less than half of what it had anticipated. A minor detail that had a greater impact than the spreadsheet was the city’s decision to cancel the public Christmas trees. Daycare costs in Friedrichshafen, where ZF is the main driver of the local economy, are expected to more than double in the next two years. That is the portion that ends up on the kitchen table.
Part of the problem is that it’s easy to blame electric cars for everything. The EV market hasn’t expanded as the boardroom slides predicted, and manufacturers have been forced to spend hundreds of billions retooling due to EU regulations. The abrupt termination of Germany’s EV subsidy in late 2023 resulted in a 27% decline in domestic sales of EVs the following year. However, the underlying issue is structural. Chinese automakers are showing up with serious goods at serious costs. Washington’s tariff threats are a distant threat. Home energy bills haven’t completely reset. Additionally, even buyers in prosperous times are just making fewer purchases because the cars themselves last longer than they used to.
The way German auto cities are assimilating this has an almost philosophical quality. In November, Thomas Fuhrmann, the mayor of Stuttgart, declared that the entire 2026–2027 plan would need to be revised. “The basis on which we wanted to build isn’t there anymore,” he said. It’s a lingering sentence. Cities must balance their budgets by law, which means they borrow money, increase fees, lay off employees, and reduce small expenses like events, trees, and daycare subsidies before addressing larger ones. As we watch this happen, it’s difficult not to wonder if the German industrial city era—the kind centered around a single cathedral-like plant—is coming to an end or if it’s simply being pushed into a shape that no one has yet fully imagined.
In the first nine months of 2024, pre-tax profits for the Big Three—VW, Mercedes, and BMW—dropped by about a third. It affects the supply chain more quickly. Berlin is still at odds over who is to blame. Speaking with people in these cities gives me the impression that they don’t fear competition. They’ve dealt with competition before. Being asked to compete, rebuild, and pay the bill all at once is what they fear. That is not the same equation. It’s actually still unclear if it adds up.
