While Germany’s car industry is well known around the world, it is mostly for brands such as BMW, Porsche, Volkswagen and Mercedes Benz, all headquartered in the west of the country.

East Germany, meanwhile, has largely been synonymous with the Trabant, a gas-guzzling, ungainly looking car produced in the state of Saxony between 1957 and 1991. Although more than 3 million Trabants were produced, the car’s shortcomings made it the butt of jokes and, more widely, a symbol of East Germany’s failings. 


Where Saxony’s engineers failed under communist rule, however, they are now thriving, as the state is rapidly acquiring the status of being as one of Germany’s main hubs of car production. “Every 10th car made in Germany comes from Saxony and two-thirds of all Porsches are manufactured here,” says Dirk Vogel, project manager at Saxony Automotive Supplier Network, a local industry association.

Saxony’s strengths

According to Mr Vogel, the main arguments for investing in Saxony's automotive industry are the state’s strong supply chain and its research and development capabilities. “We have more than 500 entities directly supplying the automotive original equipment manufacturing industry – a compelling offer when it comes to our research.”

Most recently, German conglomerate ThyssenKrupp joined forces with the Dresden University of Technology and the Lightweight Design Centre Saxony to develop an ultra-lightweight electric car.

Saxony also plays an important role for Volkswagen, which employs more than 9000 people in the region. At the turn of the century, the company chose Saxony as a test bed for a new concept – a mixed-use facility serving as a car plant, luxurious showroom and entertainment centre.

Located in the centre of Dresden, the state capital, and on the edge of the city’s main park, Volkswagen's Transparent Factory was opened in 2001 and draws visitors wishing to see the production line of the Phaeton, Volkswagen's first premium-class vehicle, while dining at a restaurant operated by luxurious hotel chain Kempinski and participating in its many cultural events.

“This venue enabled us to demonstrate our capabilities when it comes to luxurious-class vehicles, but also, thanks to its central location, it has helped us to become an integral part of community here,” says Christian Haacke, head of communications at Volkswagen's Dresden car plant.

Room to manoeuvre

Although more than a decade has passed since Volkswagen secured its prime spot in Dresden, there is still plenty room across Saxony for companies looking to invest in the automotive sector, says Peter Nothnagel, managing director at the Saxony Economic Development Corporation, a local investment promotion and facilitation entity.

“Plots that we can find for investors are available immediately and at fair prices,” says Mr Nothnagel. Land for development is not the only asset that the state has in abundance, he adds, given that 96% of Saxony's workforce has completed at least vocational training.

“Our workers have enough training and work ethics to show what German precision and quality is all about. They know how to make products as they should be,” says Mr Nothnagel.