German car production drops to 23-year low on waning exports

German car production fell to its lowest in almost a quarter of a century as Europe’s biggest economy suffers from the fallout of a global trade war.

Automakers including Volkswagen AG, BMW AG and Daimler AG produced 4.66 million vehicles in German factories last year, the weakest since 1996. The country’s VDA car lobby, which published the figures on Monday, said the 9% decrease was a result of waning demand from international markets.Germany’s status as a global manufacturing powerhouse has been built on the carmaking industry, but pollution concerns—intensified by Volkswagen’s 2015 diesel-emission cheating scandal—trade conflicts, and slowing economies have all weighed on demand. Daimler, Volkswagen and parts supplier Continental AG are slashing jobs to cut costs.

At the same time, the industry has to spend billions of euros to develop cleaner vehicles and counter the emergence of ride-sharing services like Uber Technologies Inc., which has a market value equivalent to Daimler.Germany’s domestic autos market grew 5% last year after buyers registered 3.6 million new cars, the VDA said, the most since 2009. However, the industry body has said the market is likely to contract this year.

The country cemented its recently acquired lead over Norway as Europe’s biggest electric-vehicle market after selling 63,281 e-cars last year, according to latest data from the country’s Federal Motor Transport Authority, or KBA.