"Made in Germany” cars: Germany captures wages while labour and emissions occur elsewhere
To what extent are vehicles labelled “Made in Germany” actually produced in Germany? A new study conducted at ICTA-UAB shows that, while the German automotive industry captures most of the wages associated with the production of these vehicles, a substantial share of labour and greenhouse gas emissions takes place outside the country, along global production chains.
Recently published in the journal Sustainable Production and Consumption, the study analyses the regional and sectoral distribution of working time, wages and emissions associated with vehicles produced and consumed in Germany between 1995 and 2020. Results for 2018 (the year selected by the researchers for a more detailed analysis), for example, show that “Made in Germany” vehicles generated 73% of total wages within Germany, while relying on 63% of emissions and 54% of working time in other countries.
Of the 63% of emissions generated outside German territory, 22% occurred in other European countries, while up to 41% took place in the rest of the world. The study highlights examples such as Hungary, where in 2018 up to 9% of industrial motor vehicle production depended on the manufacture of “Made in Germany” cars. Outside Europe, countries such as China also play a significant role in the value chain: in 2018, China accounted for 6% of the working time associated with these vehicles, 10% of emissions, and only 1% of wages.
“The results confirm the literature on the smile curve and unequal exchange,” explains Laura Pérez-Sánchez, lead author of the study. The smile curve is a concept that shows how higher value-added activities in global production chains capture most of the economic benefits, while manufacturing stages—more intensive in labour and emissions—receive a smaller share. In this framework, activities located at the beginning of the chain—such as engineering and design—and at the end—such as marketing, sales and, in some cases, final production—are those that capture most of the value added, represented in this study primarily by wages.
The analysis distinguishes between two value chains related to the automotive industry: on the one hand, the production of “Made in Germany” vehicles for international markets, and on the other, the global network supplying vehicles consumed in Germany. In the first case, the study shows that a significant share of emissions does not appear in either Germany’s production-based or consumption-based emission accounts, despite being essential to sustaining the country’s automotive economic activity.
“These emissions remain outside conventional indicators, even though they are fundamental to the functioning of the German economy, as they are linked to the production of intermediate goods,” Pérez-Sánchez notes.
The research is based on Multi-Regional Input-Output Analysis (MRIO), a methodology that allows tracing flows of labour, income and emissions along global production chains. The results reveal an asymmetry between benefits and impacts: the German automotive industry generates employment and relatively well-paid wages domestically, while outsourcing lower value-added activities with higher labour and climate intensity to other countries.
This inequality is also evident at the sectoral level. “We observe a particularly strong pattern within the automotive industry itself, which generates only around 5% of greenhouse gas emissions, yet accounts for approximately 32% of total working time and 50% of wages,” the researcher explains. “This implies a very low emissions intensity compared to other sectors along the value chain.”
Beyond providing a detailed picture of the German automotive industry, the study raises broader questions about social and environmental responsibility in a globalised economic system. By showing how economic benefits and environmental impacts are unevenly distributed across countries and sectors, the research invites a rethinking of the limits of conventional emissions accounting approaches and highlights the role of global value chains in debates on climate justice and ecological transition.
Reference article: Pérez-Sánchez, L.À., Aguilar-Hernandez, G.A. (2026) “Made in Germany”? Labour, wages and carbon footprints of consumption and production of the Motor vehicles industry. Sustainable Production and Consumption, 16 (4). https://doi.org/10.1016/j.spc.2026.02.011