DE Market | German Machine Tool Industry in 2025: Production Falls Sharply, Demand Stabilizes

【Published：2026/02/25】

The machine tool industry continues to find itself in a tense situation, which is largely characterised by structural changes.

These include the transformation process in the automotive industry, locational disadvantages in Germany, competition from China and the US customs policy.

After three years of decline, order intake has now stabilised at a low level and reached rock bottom. However, production remained significantly down in 2025.

There is still a large gap compared to the peak year of 2018. Necessary capacity adjustments are also reflected in employment levels.

Order intake fell by 3 per cent overall in 2025.

While foreign orders rose by 3 per cent, domestic orders were down significantly by 16 per cent, partly due to base effects.

However, the fourth quarter showed a positive trend with an overall increase of 4 per cent (foreign +6 per cent, domestic -2 per cent). Investment in new machinery remains subdued, while service and retrofitting are supporting demand.

The automotive industry continues to show weakness, whereas defence, aviation, medical technology and electronics are providing solid impetus.

Production fell by 8 per cent to €13.6 billion in 2025 due to low order intake.

Compared to 2018, this represents a nominal decline of €3.4 billion or 20 per cent; in real terms, the gap is as much as 35 per cent.

The sales markets also presented a weak picture: domestic sales fell by 7 per cent and exports declined by 9 per cent.

Europe stabilised slightly, with Italy in particular showing growth again.

In contrast, the uncertain customs policy of the USA led to a 9 per cent decline in exports, and fiercer competition in China led to a decline in exports of almost 20 per cent.

The 'local for local' principle is becoming increasingly important for German manufacturers with their own local sites.

German imports fell by a further 5 per cent after a sharp decline in 2024. Domestic consumption fell by 6 per cent, confirming the weakness of investment in the German market. Capacity utilisation averaged 76 per cent in 2025, 6.1 points below the previous year's figure and well below the long-term average.

Continued weak demand is leading to further capacity adjustments.

By December, the number of employees had fallen to 62,700 – a decline of 2,700 employees or 4.1 per cent compared to the previous year.

Sources: Federal Statistical Office, Ifo-Institute, VDMA, VDW

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

Source: https://vdw.de/wp-content/uploads/2026/02/stat_wiza-lang-englisch_2025-Q4_2026-02-25.pdf