German machine tool orders gain momentum amid automotive headwinds

Germany’s machine tool industry recorded stronger orders during the first half of 2026, although demand from automotive manufacturers and suppliers remains challenging.

Incoming orders increased 12% year on year in the second quarter following 15% growth in the first quarter. This brought total order growth for the first half to 14%, with domestic orders rising 16% and overseas orders increasing 13%.

VDW, the German Machine Tool Builders’ Association, described the two consecutive quarters of double-digit growth as encouraging but cautioned that the recovery is not yet widespread. Results were measured against a low comparison base, while large projects continued to make a significant contribution.

Demand also varied considerably among customer industries. Aviation, defense, electronics and medical technology performed strongly, while automotive and supplier industries continued to face the greatest difficulties. Automotive’s share of total German machine tool sales fell to 23% in 2025, compared with 27% for mechanical engineering.

Improved orders had not yet translated into higher production. Machine tool output declined by an estimated 6% in the second quarter and by 7% during the first half, reaching approximately €5.9 billion. However, stronger orders are expected to support production later in the year.

Export conditions showed early signs of stabilization. Deliveries to the United States increased 8% during the first half, while exports to China declined 24%. Manufacturers nevertheless reported indications of stabilizing Chinese demand, with local production remaining important amid intense price competition.

Within Europe, exports fell 6% overall, although shipments to France rose 25%. Poland and the Czech Republic also performed positively, while India continued to expand and became the industry’s fourth-largest market.

Domestic sales remained 10% below the previous year, but rising orders and improving business indicators point to a more favorable outlook. Capacity utilization stabilized at approximately 75%.

For automotive manufacturers and suppliers, the figures indicate that investment conditions remain cautious despite the wider recovery in machine tool orders. A sustained improvement will depend on stronger demand, renewed capital investment and the conversion of existing orders into production.