The German automobile industry dates back to the late 1870’s with Karl Benz and Nikolaus

Otto developing the four stroke internal combustion engine. In 1887, Benz fitted this engine
to a coach which led to the first modern car. The below figure shows the replica of Benz’s
car

Figure 1: Replica of Benz’s Motorwagen

During the Great Depression in the early 1930 the German auto industry went through
severe crisis. Out of eighty six auto companies only twelve could survive the crisis. During
the mid 1930’s the automobile industry started to turnaround. A major reason for this
turnaround was a policy known as “Motorisierung” instituted by Adolf Hitler. Post World War
II, the German automotive industry was badly hit. The London Agreement on German
External Debts of 1953, provided the much needed relief. In the following paragraphs we
will discuss about the modern day German automotive industry and the automotive cluster
in Stuttgart.

Outline of Germany

Germany is an European nation situated in western central region with North and Baltic Sea
in the North. It shares its borders with Denmark in the north, Poland and Czech Republic in
the east, Austria and Switzerland in the South and France, Belgium and Netherlands in the
west. It constitutes of 16 states. Berlin is the capital of Germany.
 Figure 2: Geographic location of Germany

Germany is the 63rd largest nation in terms of area. It is 137,847 sq mile in area. It has a
population of 82.29 million in 2018, which makes it the 17 th most populous nation. The
population density of Germany is 611 people per sq mile. An overview of the economic
parameters is shown below
Source of data: https://tradingeconomics.com/germany/indicators

The detailed Business status of Germany is as follows:

Source of data: https://tradingeconomics.com/germany/indicators

Germany is currently the 4 th largest economy in the world with a GDP of $ 4.211 trillion
(Nominal) and 5th largest economy in the world with a GDP of $ 4.373 trillion (PPP). It has
an average GDP growth rate of 2%. Germany is a member of European Union (EU), World
Trade Organization (WTO) and The Organisation for Economic Co-operation and
Development (OECD).

Germany’s Competitiveness
Germany is blessed with natural resources such as timber, natural gas, coal, lignite,
uranium, iron ore, arable land, construction materials, potash, nickel, salt, and copper.

Apart from these, Germany is a major producer in the following resources :

 A leading producer of lignite.

 The second largest producer of refined selenium.
 The third largest producer of kaolin.
 The fourth largest producer of sulfur.
 The fifth largest producer of potash.
 The sixth largest producer of refined copper.
 The seventh largest producer of crude steel.

Source: www.azomining.com

Metal manufacturing and processing sector is one of the largest sector in Germany. It covers
steel and iron, non-ferrous metal, and foundry industries. Germany produces about 43
million tons of raw steel annually, making the country the largest steel producer, consumer,
importer, and exporter in Europe. 

Germany has 47.96% of land as agricultural land in 2015, according to the World Bank
collection of development indicators, compiled from officially recognized sources.

Source: tradingeconomics.com

The Business environment in Germany is very good. The ease of doing Business rank is 24
in 2018. The low corruption rank shows that the environment is conducive for business.
Source: tradingeconomics.com

Source: tradingeconomics.com
 Stuttgart

Stuttgart is located in the southern part of Germany. It  is the capital and largest city of

the German state of Baden-Württemberg. It has a population of 609,219. It is the sixth
largest city of Germany.  Mercer listed Stuttgart as 21st on its 2015 list of cities by quality of
living, innovation agency 2thinknow ranked the city 24th globally out of 442 cities  and
the Globalization and World Cities Research Network ranked the city as a Beta-status world
city in their 2014 survey. It is known as the manufacturing hub in Germany. It is a host to
an impressive list of companies which includes Porsche, Daimler, Robert Bosch, IBM etc. The
most important sectors (by number of persons without social insurance contributions,
excluding trade, construction and public sector) include:

 automotive engineering with suppliers,

 the metal industry with the mechanical engineering and the production of metal
products as well
 the information services.

The region has a strong presence in terms of Research and Development. The following facts
substantiate this claim

Stuttgart has a perfect balance of Multinational companies and innovative small and medium
sized local companies which help to make this cluster a very productive one.