Overview

• Chancellor Friedrich Merz hosts industry leaders, unions and regional heads to address a deep slump in sales, profits and jobs across Germany’s car sector.
• Finance Minister Lars Klingbeil has signaled an extension of the Kfz tax exemption for pure electric cars, with the latest plan running through 2035 after uncertainty over post‑2025 registrations.
• Merz and the CDU push for loosening or delaying the EU’s 2035 rule, while SPD ministers oppose changes, and state leaders from Bavaria and Lower Saxony float allowing hybrids beyond 2035, which would require EU agreement.
• Options under discussion include a green‑steel bonus tied to carmakers’ use of European low‑carbon steel, potential ICE tax changes, reinstated purchase incentives and a social‑leasing program, all subject to EU or budget decisions.
• Analysts cite fierce Chinese EV competition, U.S. trade barriers and high domestic costs as key pressures, with recent data showing steep profit falls, a 42% drop in exports to China and about 52,000 German auto jobs lost year over year.