German 'car capital' in dire straits as automotive sector crisis intensifies
Stuttgart, known as Germany’s car capital, is facing a deepening financial crisis. The city expects to lose its debt-free status by 2026 as urgent investments and falling tax revenues strain its budget. Major employers like Porsche and Mercedes-Benz are also cutting thousands of jobs, adding to the economic pressure.
For years, Stuttgart stood out as a rare debt-free city, maintaining this status since 2018. But officials now warn that free liquidity will turn negative by late 2025, with spending outpacing income. City councillor Thomas Fuhrmann has stressed the need for strict budget controls and reprioritising public services to avoid deeper financial trouble.
The crisis hits as Stuttgart’s automotive sector, the backbone of its economy, faces steep job cuts. Porsche plans to reduce its workforce in the region by 15%, axing 1,900 jobs at its Stuttgart and Weissach plants by 2029. Meanwhile, Mercedes-Benz aims to slash costs by €5 billion by 2027, offering severance deals to employees. Nationwide, the German Federal Statistical Office reports the automotive industry lost 48,700 jobs in 2024 alone—the lowest employment level since 2011. Local entrepreneur Simon Betschinger has criticised German policymakers, arguing that moral agendas have overshadowed economic priorities. With trade tax revenues plummeting, Stuttgart’s leaders now face tough choices to stabilise finances while supporting a struggling industrial base.
The city’s financial outlook has darkened, forcing officials to prepare for new debt from 2026. Job losses at Porsche and Mercedes-Benz will further shrink the local economy, while falling tax income limits options for recovery. Stuttgart must now balance cuts with investments to prevent a deeper downturn.
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