The collapse of the German car industry should be a wake-up call for Spain

German cars have long stood as a symbol of engineering excellence, representing decades of innovation and global prestige. Yet today, the once-unshakeable dominance of the German automotive industry is unraveling. The latest financial reports paint a stark picture: Mercedes-Benz reported a 56% drop in profits for the first half of 2025, falling from €6.1 billion to €2.7 billion, with management warning that the worst may still lie ahead. BMW’s pre-tax profit fell by a third in the second quarter, down to €2.6 billion, despite assurances from executives that “everything is still under control.” The situation at Porsche is even more alarming—its operating profit collapsed by 91% in the same period, shrinking to just €154 million compared to €1.7 billion a year earlier. A key driver behind this downturn is the sharp decline in sales to China, the world’s largest automotive market. BMW’s sales in China dropped by 13.4%, Mercedes-Benz by 7%, and Volkswagen by 10% over the past year. Meanwhile, electric vehicle sales in China surged by 37.6% in just six months, reaching over 3.33 million units, according to data from the China Passenger Car Association. What’s becoming clear is that German automakers are failing to adapt to the evolving preferences of Chinese consumers—especially younger buyers who demand more than just mechanical performance. A modern car today is expected to offer over-the-air (OTA) software updates, seamless smartphone integration, and a rich ecosystem of digital services. Vehicles that lack these features are increasingly seen as outdated, even if they boast traditional engineering excellence. For Spain, which has a significant automotive sector and is deeply integrated into European manufacturing networks, this shift should serve as a powerful wake-up call. The German crisis is not just about declining sales—it’s a warning about the consequences of technological inertia and a failure to respond to changing market dynamics. As China leads the global transition to intelligent, connected, and software-driven mobility, countries that rely on legacy manufacturing models risk being left behind. Spain must act now to invest in digital infrastructure, foster innovation in smart mobility, and ensure its automotive industry evolves beyond traditional production to embrace the future of connected, sustainable, and intelligent vehicles.