These are not good times for the automotive industry. A long-distance race in production costs, nearly impossible to win against China, is joined by tariff wars, supply chain controls, and the logistics nightmares that the increasingly globalized world is turning into, which are draining traditional manufacturers like Nissan.
In this context, a study details the staggering difference that arises when manufacturing in Germany versus Morocco, considering only the average labor cost: while the epicenter of Europe’s automotive industry incurs $3,300 per car, in Morocco it is merely $106.
German Manufacturers, the Highest Paid
The Oliver Wyman consultancy study analyzed more than 250 vehicle assembly plants around the world and reveals an average difference of nearly $1,700 per vehicle in labor costs between European premium brands and Chinese manufacturers.
Among the groups of companies with the highest labor costs per vehicle, we find the European premium manufacturers (think Mercedes-Benz or Audi) with an average of $2,232 per vehicle. According to the consultancy, these manufacturers face challenges such as unions, strict regulations, and complex manufacturing processes, which contribute to their elevated production costs.
Specifically, in Germany the labor cost of each vehicle is set at more than $3,000, which also means that workers can count on a decent and stable standard of living in the long term. Something almost extinct.
They are followed by the United Kingdom, Italy, France, and the United States. The reality is that many brands are moving production to the US: from Audi to Volvo, including Honda or Hyundai, there aren’t few manufacturers that have announced they would produce more on American soil in order to reduce costs arising from tariff measures.
Next come those who are exclusively dedicated to manufacturing electric vehicles, with an average of $1,660 in labor costs per vehicle, and are followed by makers of conventional models from the US, Europe, and Asia. This group has an average labor cost of $880 per vehicle. They benefit from diversified manufacturing networks and reduced production costs thanks to older factories and lower depreciation rates, the consultancy notes.
We Think of China, but Morocco Wins
The group of manufacturers that has managed to dominate worldwide with their electric cars are the Chinese, with an average labor cost of $585 per vehicle. The secret? Modern facilities and, in most cases, regulated working conditions and wages of 4 euros per hour.
But there are countries that make China look expensive to produce: in Mexico the cost is $305, in Romania $273 and in Morocco… $106. In an intermediate position we find Spain, where it stands at $955.
With the cost of manufacturing in Germany, manufacturers can open three, ten or thirty shifts in other countries.
That explains how it is possible that by mid-December 2025 Volkswagen closed its factory in Desde. The first time in 88 years of the brand’s history that VW has had to shut a plant in its own country.
It did not stop there. Volkswagen announced in March 2026 that belt-tightening must continue and it will lay off 50,000 employees over the coming years.
The unanswered question remains whether the sustainable development of the automotive industry can be reconciled with a dignified standard of living, or if we are headed toward a Chinese model in which profits take precedence over workers’ rights. We want cheap cars, yes, but at what price?
