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Industrial research

German companies are among the most innovative in Europe. Industry-based and -financed investments account for more than two thirds of all R&D funding in Germany.

Companies are especially involved in applied research and work closely with universities, universities of applied sciences and non-university research institutes. Examples of successful technology transfer can be found in the areas of environmental research, resource-efficient production and new materials.

Organisational details

German companies are affiliated to different, usually industry-specific associations to effectively represent their collective interests. The Federation of German Industries (BDI) is the umbrella organisation for 40 affiliated industrial associations that represent the interests of over 100,000 companies with more than 8 million employees. The BDI coordinates the views and recommendations of its members and provides business support, such as information covering all fields of economic policy.

Cooperation between industry and research

Industry and research cooperate in many areas. For example, there are numerous joint programmes and research projects involving companies as well as research and research-funding organisations.

Many different forms of cooperation are possible here:

  • Contract research for industry carried out by universities and non-university research institutions
  • Joint staffing and funding of research projects
  • Industry-funded research groups
  • Donations and sponsorship for specific R&D institutes
  • Establishment of endowed professorships by companies
  • Jointly funded research structures or institutes
  • New collaborative models in networks, clusters or public-private partnerships/research campuses

The Deutsche Forschungsgemeinschaft (German Research Foundation, DFG) also supports knowledge transfer between research and industry. One example is a transfer project in which researchers at the University of Stuttgart are developing driverless vehicles. In collaboration with scientists at the Fraunhofer ITWM institute and the company fleXstructures from Kaiserslautern, a digital model of the driver is being developed. The “EMMA4Drive” software prototype analyses and evaluates the safety and ergonomics of passengers during manoeuvres involving dynamic loads.

Facts & figures

Approx. 476,000 R&D personnel, including 277,000 researchers (2019)

R&D expenditure by the private sector as a proportion of GDP: 2.1 per cent;
annual budget for internal R&D expenditure: approx. 71.0 billion euros; additional external R&D expenditure: 22.9 billion euros (2020)

Research activities

The largest investments are made by the automotive sector: carmakers and their suppliers spend – despite the problems caused by the pandemic in 2020 – more than 38 billion euros on research and development (internally and externally). That is more than 40 per cent of the total amount invested in R&D by German industry.  Accordingly, this is also where the largest number of people are employed: approx. 135,000 employees work in R&D for the automotive engineering sector.

Electrical engineering companies also engage heavily in research. They spend almost 13 billion euros on R&D and employ nearly 84,000 people in the research sector.

The German mechanical engineering sector is also strong in research: companies here invest almost 8 billion euros and employ more than 51,000 R&D personnel.

A graph showing the companies with the highest R&D spending in Germany

Among the world leaders

In an international league table of companies with the highest R&D investments, German companies rank among the world leaders. The car manufacturers Volkswagen, Daimler, BMW and the pharmaceuticals company Bayer are in the top twenty.

A graph showing the budget of German companies and industrial research: 3% public sector, 8% international, 88% industry

Research budget

German industry spent 71.0 billion euros on internal R&D in 2020. The decrease compared with the record-breaking previous year was due to the Covid-19 pandemic. Industry is responsible for carrying out and funding over two thirds of R&D activities in Germany.

Industrial research associations

Small and medium-sized enterprises (SMEs) play a central role in research and development (R&D) in Germany. It is also important for SMEs to pool their R&D resources because as a rule these businesses have insufficient or no research capacities of their own, especially with regard to more basic research.

Research-based companies and independent private research institutes have joined forces with the aim of carrying out industrial research especially for the SME sector.

Find out more about these industrial research associations:

The cover of the brochure "Industrial Research in Germany". It depicts a robotic and a plant based hand shaking hands. Over it is written the brochure's title. On the bottom left there is the logo of the Federal Ministry of Education and Research. On the bottom right is the logo of "Research in Germany"

Industrial research in Germany

2018, 32 pages

What makes German industrial research so successful? And what opportunities does it offer talented researchers? Find out in this brochure.

Bundesverband der Deutschen Industrie e. V. (BDI)

The BDI is the umbrella organisation for 40 affiliated industrial associations that represent the interests of over 100,000 companies with more than eight million employees.

Germany Trade & Invest (GTAI)

Germany Trade & Invest promotes Germany as a business and technology location and supports companies based in Germany with global market information.

German Centre for Industry and Trade

German Centres are based in China, Mexico, Russia and Singapore. They offer offices, services and networks and bring together German and local businesses with foreign trade development agencies of German industry, the German states and the Federal Government under one roof. The German Centres are primarily open to German enterprises.