Viewing German Automotive Industry 2035 through the Shift of Profit Pools: The Logic of Industrial Restructuring Revealed by Deloitte Report

Looking at the German Automotive Industry in 2035 through Profit Pool Migration: The Industrial Restructuring Logic Revealed by the Deloitte Report

Introduction: When the Value of a Car Is No Longer Defined by "Manufacturing"

For German industry, the automobile is not only a pillar of exports but also a symbol of engineering capability and technical standards. However, a recent study by Deloitte, "Future Automotive Mobility to 2035," has made a prediction that unsettles traditional industry participants: over the next decade, the profit pool for automotive mobility will undergo at least 11 significant shifts. This change is not simple market fluctuation; it means that the underlying logic of the entire automotive value chain is being rewritten—from being centered on vehicle ownership and hardware manufacturing to focusing on mobility services, data operations, and user experience.

Background: Deloitte's 2035 Mobility Landscape

Deloitte's research focuses on the United States and five European countries (France, Germany, Italy, Spain, and the United Kingdom), using executive interviews, consumer surveys, and profit pool simulation tools to depict the mobility ecosystem of the next decade. The report notes that despite considerable industry uncertainty, the U.S. automotive mobility market is expected to nearly double by 2035, while the European market, although perhaps slightly slower, is also poised for growth. However, the source of growth will no longer be traditional new-car sales and supply chain profits, but rather new service areas and digital business models. This conclusion has particularly far-reaching significance for Germany, one of the most concentrated regions of the global automotive industry.

Underlying Reasons: Why Will Profit Pools Shift?

The migration of profit pools is not accidental. Driving factors include consumers' growing preference for sustainable mobility, regulatory pressure from climate policies, and digital technologies that transform vehicles from "standalone transportation tools" into "mobile computing terminals." Alongside these changes, vehicle ownership models are loosening, and shared mobility, subscription-based leasing, and data-driven value-added services have become new growth points for value. Geopolitics and supply chain restructuring have further accelerated the contraction of traditional profits.

The Deloitte report places special emphasis on the word "value." For mobility service providers such as maintenance, leasing, and fleet management, understanding the shift in the value chain is more critical than ever. This means that pure automotive manufacturing profits are being gradually diluted, while service profits around the entire vehicle lifecycle are on the rise.

Impact on German Industry: Can Manufacturing Advantages Be Transformed into Service Advantages?

The DNA of the German automotive industry lies in precision manufacturing and engineering efficiency. Over the past century, this positioning has made Germany a global leader in automotive exports. However, as profit pools shift from hardware to software and services, Germany's traditional advantages may no longer automatically translate into competitive barriers.

First, German automakers are facing a "dual transformation" dilemma: they need to reduce capacity for fuel-powered vehicles while investing in electric vehicles and software platforms. The Deloitte report shows that customer expectations for digital experiences and mobility services have risen significantly, meaning German companies need to shift their past focus on mechanical components toward building data ecosystems.Second, Germany's Industry 4.0 infrastructure provides a good starting point for intelligent production, but the value center of automotive products is no longer the production line; it is the road, the cloud, and user scenarios. If German companies cannot integrate their manufacturing capabilities into service platforms, new players from the United States and China may further erode their market share.

In addition, the migration of the profit pool will reshape the supply chain landscape. Traditional Tier 1 suppliers that rely on core internal combustion engine components will face shrinking profits, while new core components such as batteries, semiconductors, and sensors may redraw the industry map. Whether Germany can build new competitiveness in key areas such as battery chemistry, chip design, and software-defined vehicles will determine whether its industrial system can ascend from mid-to-low value positions to high-end service positions.

European and Global Impact: A Race with No Alternative Paths

Deloitte's research focusing on five European countries reflects the critical position of the European market in the electric vehicle and mobility transformation. Europe's carbon emission regulations and the 2035 target to ban the sale of fuel-powered vehicles have set a timeline for industrial transformation, but this also means higher transformation costs. In contrast, the U.S. market has a more diverse range of vehicle models and a flexible policy environment, which may attract more innovation capital.

At the global level, the migration of the profit pool is redrawing the coordinates of competition. China's new electric vehicle companies have defined new categories through software and electronic architectures, while Tesla in the United States has reshaped customer relationships through direct sales and OTA updates. If Germany does not act quickly on mobility services and data ecosystems, the center of the global automotive industry may drift further away from Europe toward the two poles of East and West.

Long-Term Trend Assessment: Key Variables for the German Automotive Industry in the Next 3–10 Years

Looking ahead, by 2035, the mobility market will have transformed from an industry defined by manufacturing into an ecosystem defined by services and data. For Germany, the following trends deserve continued attention:

1. The speed of profit pool migration will outpace the speed of technology adoption. Even if electrification progresses more slowly than expected, software-defined vehicles and subscription services will still accelerate the shift of profits. 2. German automakers may need more cross-industry collaboration. Forming alliances with technology companies, energy enterprises, and even urban infrastructure planners will be key to capturing new profit pools. 3. Industrial policy needs to shift toward supporting the "mobility ecosystem" rather than merely "automobile production." Policymakers may need to place 5G, charging networks, data sovereignty, and other factors at the core of the new industrial strategy.

Deloitte's research does not paint a gloomy future; rather, it warns: the future automotive mobility market will be larger, but the share belonging to traditional manufacturers may not necessarily be larger. If German industry wants to continue playing the central role in the global automotive industry in 2035, it must convert the trust legacy of "Made in Germany" into the innovation engine of "German Mobility." This is a revolution more profound than the replacement of the internal combustion engine.