German auto production rises unexpectedly on car output

German industrial production has unexpectedly risen, according to data from federal statistics agency Destatis; monthly production rose by 0.8% in November, defying analyst expectations for a 0.7% decline. The development marks the first time output has actually increased for three consecutive months since 2022, and was driven by a 7.8% uptick in car production alongside gains at machinery-related companies. 

The positive manufacturing numbers stand in contrast with a 2.5% unexpected drop in exports as shipments to other EU member countries and the US fell by 4.2% month-on-month. Germany’s trade surplus consequently narrowed to €13.1bn (US$15.2bn) from €17.2bn in October, with exports to the US down 22.9% year-on-year. This is almost entirely due to the  Trump administration’s imposition of 15% import tariffs on most EU goods under a deal made in July

Meanwhile, month-by-month imports from China—including vehicles—rose by 8%, due in part to the Trump administration’s imposition of tariffs on Chinese-made goods. To be sure, the EU still enforces duties on Chinese electric vehicles (EVs) on a per-OEM basis; state-backed OEMs that allegedly did not fully cooperate with an investigation face the harshest duties (for example, SAIC at 43.5%). By contrast, the US imposes insurmountable tariffs as high as 245% on the same products.

Factory orders in general had jumped 5.6% in November driven by large-scale purchases, providing additional signals that conditions in German industry improved toward year-end following another period of meager economic expansion. However, these improvements were partially offset by declining energy production as the country gradually moves away from fossil fuels.

Earlier in the week, Chancellor Friedrich Merz urged caution to reporters. Germany is not out of the woods yet: “The economic situation in Germany remains worrying. This applies to large parts of industry, but also to large parts of the small and medium-sized enterprises and the skilled trades. Companies in Germany are in a very difficult situation.” Merz’ administration is planning to spend hundreds of billions of euros updating aging infrastructure and defence capabilities to yield stronger growth during 2026.

In an investors note, Franziska Palmas, Senior Europe Economist at Capital Economics, also urged that expectations be managed. “Given the significant structural headwinds facing the sector, we doubt this is the start of a sustained recovery and still expect German industrial output to decline in the medium term.”