Overview

• Chancellor Friedrich Merz hosts an auto summit on Thursday with car bosses, unions and key ministers to craft a response to the sector’s downturn and to debate the EU’s 2035 sales rule.
• Merz has publicly urged rolling back or delaying the EU ban on new combustion‑engine cars, a move opposed by Environment Minister Carsten Schneider and other SPD figures in the governing coalition.
• Finance Minister Lars Klingbeil has proposed extending Germany’s EV vehicle‑tax exemption for new registrations through the end of 2030, with earlier buyers receiving the largest benefit.
• Policy options under discussion include raising the annual car tax on combustion vehicles, launching a social‑leasing program for low‑income households, reinstating purchase incentives, and tying regulatory relief to the use of European green steel.
• The summit follows steep industry strain, including profit drops at Volkswagen, BMW and Mercedes‑Benz, a 42% fall in EU car exports to China in H1, roughly 52,000 German auto jobs lost over a year, supplier cutbacks, and intensifying competition from Chinese EV makers.