Hessen – a land of opportunity for the automotive industry

In a recent study, the Hessenmetall employers’ association focused on the transformation of the automotive sector in Hessen. The paper gives a positive outlook for the regional industry.

© Oliver Zarski

Wolf Matthias Mang, Managing Director of the Hessenmetall employers’ association, believes there are good prospects for the automotive industry in Hessen. The state can ‘become a land of opportunity for automation and connectivity’, he said in a study on the future of the automotive industry that was conducted by the Institut der deutschen Wirtschaft (IW) on behalf of Hessenmetall. The employers’ association represents the largest industry in Hessen and the interests of more than 680 member companies in the metalworking, electrical and IT industries. Employing a total of 241,000 people and adding gross value of roughly €20 billion in 2020, the automotive sector ‘represents a significant portion of Hessen’s prosperity’, as the almost extensive study put it.

Based on its findings, vehicles powered by green electricity will dominate the market as early as 2035. However, the study says there will still be new opportunities in the coming years for the approximately 22,600 people at Hessian companies that do business based on the traditional internal combustion engine. While the study predicts that companies making internal combustion engines or parts for them will see their revenues decline over the next three years, roughly 90 per cent of these companies indicated that they wished to enter new markets for electric motors, vehicle connectivity and vehicle automation during this period. According to the study, the transformation towards electrification, automation and connectivity will require significant adjustments within Hessen’s automotive sector. Simultaneously, though, it offers opportunities to bolster Germany’s position as a world leader for vehicle exports.

The analysis of the location factors shows that businesses in Hessen enjoy good locational advantages. Thanks to its central position in Germany and Europe, Hessen stands out for its strong infrastructure in particular.

On top of that, the region has strengths in research and development, education and training, the labour market as well as in digital transformation. For instance, a dynamic ecosystem has developed around the Digital Hub Cybersecurity. With the growing significance of self-driving vehicles and the trend towards collecting and analysing increasing amounts of transport data, there are going to be larger roles for data processing and visualisation as well as safety architectures.

The business attributes show that Hessian companies are already dealing with the topic of Industry 4.0 more frequently than the German average. This is a key advantage because the implementation of digital processes and business models will have a critical influence on the future success of the automotive sector. When matched with global competitors, especially new ones from countries such as the US or China, lean and digital production structures will decide how efficiently a car can be made and who can obtain and grow market share in the new world of automotive.