DE Market | Weak Demand and a Sluggish Domestic Market Continue to Drive Production Declines in Q1–Q3 2025

The persistent weakness in demand continues to shapemarket developments in the machine tool industry.

While there are initial signs of stabilization in some foreign markets, overall conditions remain challenging.

The German market in particular is showing pronounced signs of strain, while international demand is providing only limited relief.

The downward trend in order intake continued. Overall orders fell by 5 percent in the first three quarters, driven almost entirely by the domestic market, where orders dropped sharply by 20 percent.

By contrast, foreign orders recorded a slight increase of 2 percent, providing a degree of stability. Weak investment activity in

Germany continues to weigh heavily on new machine business. 

Production developments clearly reflect the subdued demand. Total production was 9 percent below the previous year’s level by September.

The machinery segment as a whole declined by 11 percent and thus accounted for the largest share of the overall downturn.

Within this segment, both cutting and ablation technology posted a decrease of 11 percent, while forming technology fell by 10 percent. The components and accessories segment performed somewhat more

robustly with a decline of 7 percent. Services such as installation, repair, and maintenance remained comparatively stable, decreasing by only 2 percent.

Market conditions also remained difficult on the salesside.

Domestic sales fell by 14 percent, underlining the pronounced investment restraint in Germany. Exports also declined, falling by 9 percent. In addition, the renewed tightening of U.S. tariff policy under President Trump is weighing on the export business.

Higher import duties are creating additional uncertainty among American customers and dampening their willingness to invest.

German imports fell by 7 percent, further highlighting the subdued demand. Domestic consumption as a whole declined by 11 percent, confirming the structural weakness of the German market, which remains significantly below its normal investment level.

Employment is also beginning to show the effects of the market environment. On average, employment in the first three quarters fell by 0.8 percent. In September, the number of employees was 0.7 percent below the previous year's figure. Capacity utilization decreased by 6.1 percentage points year-on-year. At 77 percent in October, capacity utilization remains well below the long-term average.

For 2025, a significant decline in production of around 10 percent is still expected. For 2026, however, initial signs of a recovery in order intake are emerging.

The domestic market, starting from a low level, is expected to regain some momentum, and slight impulses are anticipated from abroad as well. Production, however, is likely to remain at the 2025 level due to the subdued order intake.

*This article is reprinted from VDW (German Machine Tool Builders' Association), 

Source: https://vdw.de/wp-content/uploads/2025/12/stat_wiza-lang-englisch_2025-Q3_2025-12-01.pdf