Economy in transition: How Leipzig is responding to falling car profits
The economic landscape of Leipzig is on the verge of upheaval. For years, the Porsche and BMW plants were seen as the driving force behind the city's development. Their establishment in the early 2000s led to an industrial boom, thousands of new jobs and continuously rising trade tax revenues. However, the outlook is now gloomy: Both car manufacturers are struggling with falling profits - and this has consequences for Leipzig's city coffers.
Porsche in particular recorded a drastic slump in profits in the first quarter of 2025: its operating result fell by over 40 percent, partly due to weak business in China and potential US tariffs. According to current trends, BMW is also paying noticeably less trade tax in advance. This is a noticeable setback for Leipzig, where the manufacturing industry has at times accounted for around a third of trade tax revenue.
Although the city council expects revenue to continue to rise overall, the declines at Porsche and BMW have already been factored into the current budget. Revenue from the industrial sector is shrinking - a development that Leipzig City Hall can no longer ignore.
Leipzig seeks new growth areas
In response, Leipzig has initiated a change in economic policy. The city wants to become less dependent on the automotive industry and build its economic base on several pillars. As part of a so-called cluster strategy, innovation fields such as the digital economy, biotechnology and greentech are now taking center stage.
These industries of the future are receiving targeted support - for example in the form of space for relocations, investments and infrastructural support. Specific projects such as the emerging digital hub in the cotton mill or the expansion of BioCity at the trade fair are intended to make Leipzig more attractive as a location for technology, research and start-ups.
Automotive remains, but is no longer the sole focus
Despite this strategic realignment, the automotive industry remains an important pillar of Leipzig's economy. However, it is no longer the sole engine of growth. The recent slump at Porsche shows how important it is to spread risks more broadly in future.
The transformation is challenging and will take time - but it is necessary. By developing future-oriented industries, Leipzig aims to become more crisis-proof in the long term and strengthen its economic resilience.
