DAX-listed companies are increasingly posting losses in Germany. According to EY, 23 of the DAX 40 companies have been operating at their German locations for more than a year, while their foreign operations continue to generate profits. This is turning Germany into a cost factor. Industrial production is faltering. Rampant bureaucracy is slowing things down. Research and development is becoming increasingly expensive. (wiwo: 08.01.26)
DAX Companies and Germany as a Business Location: Profits Increasingly Generate Abroad
The auditors at EY point to hard figures and state them verbatim: “Of the DAX 40 companies, 23, along with their German subsidiaries, have been operating at a loss for more than a year, while the group as a whole remains profitable. Nine companies have been suffering from this imbalance for more than four years. They are all very successful internationally, while posting losses at home.” Many stock market giants interpret such findings as an operational mandate, not merely theoretical. This puts Germany as a business location under re-evaluation, as investments must compete daily against alternatives.
However, EY describes this trend not as a coincidence, but as a consequence of global shifts. The analysis states: “In a global economy, business models are subject to constant change.” The comparison is equally clear, as EY adds: “Other countries are gaining in attractiveness, both in terms of production and research or sales conditions.” For Germany as a business location, the sum of costs, speed, and planning certainty ultimately counts, because otherwise every project falls behind schedule.
Bureaucracy and Research and Development Delay Decisions
At the same time, EY identifies factors that directly impact margins in Germany. High taxes and high labor costs squeeze profits. Bureaucracy lengthens processes, and administrative costs are noticeably increasing in many areas. Research and development is also becoming expensive, even though this is precisely where future competitiveness is built. Companies are now calculating these costs more carefully because markets outside Europe often scale faster.
Therefore, EY also warns of a chain reaction regarding taxes and structure. Loss carryforwards lose value if companies in Germany do not expect to generate a profit in the long term. The tax burden can then actually increase. This further weakens Germany’s position as a business location. Industrial production also suffers because corporations are more hesitant with new programs and start up capacities later.
Industrial production falls behind when value creation migrates elsewhere
This is causing many DAX-listed companies to rethink their location strategy, and not just for their factories. Corporations are relocating services, development functions, and patents more quickly when value creation takes place elsewhere. Research and development then move closer to markets that provide growth and data. Consequently, innovation work takes place where teams can test and decide faster. This impacts the economic landscape because high-value tasks and know-how rarely return.
Finally, the automotive industry demonstrates how concrete this logic already is. Volkswagen opened a new development center in Hefei at the end of November, and Oliver Blume emphasized the goal of becoming a technology leader in the world’s largest automotive market. The slogan “In China for China” is therefore circulating in several sectors. When foreign subsidiaries develop more in-house, license payments to Germany tend to decrease, and profits shrink domestically. DAX-listed companies then pay less tax, while industrial production further diminishes in substance. The BDI is sharpening its tone, with Peter Leibinger saying: “The business location is in free fall” and also: “This is not a cyclical dip, but a structural decline.”