By Riana Frömmrich & Tim Bublies
When a VW and a Hyundai cost the same, drive the same distance, and charge equally fast — why does the VW still win?
The German automotive industry is undergoing one of the most profound transformations in its history. The shift from internal combustion engines (ICEs) to battery electric vehicles (BEVs) has altered competitive hierarchies that stood for decades: Tesla redefined the segment, Chinese manufacturers are entering the market with competitive products, and Korean brands have established themselves as credible alternatives to German manufacturers. For domestic manufacturers, the question is no longer whether they can build excellent cars, it is whether German origin still carries weight in a market being reshaped by electrification.
A new study addressed exactly this question: Do German consumers exhibit a home bias, the tendency to favor products from one’s own country over comparable foreign alternatives, when purchasing BEVs, even when price, driving range, and charging time are held constant? And if so, under which conditions is this preference stronger or weaker?
The Study: Isolating Brand Origin from Product Attributes
A central challenge in country-of-origin research is disentangling brand preference from objective product differences. If consumers choose a domestic brand over a foreign one, is it due to a home bias or simply because it is genuine a better car?
To isolate the origin effect, the study employed a profile-based experiment with 454 respondents. Each participant evaluated ten hypothetical BEV profiles that systematically varied four attributes: brand (four domestic brands: VW, BMW, Mercedes-Benz, Audi and four foreign brands: Tesla, Hyundai, Škoda, SEAT), price, driving range and charging time. Different attribute levels were chosen to approximate entry-level, mid-range, and premium BEV models currently available on the market. The data were analyzed using regression analysis, allowing the impact of brand origin to be assessed while holding the key vehicle attributes constant.
Three hypotheses guided the analysis: first that home bias exists in the German BEV market (H1), second that it is stronger in the premium segment (H2), and third that it is moderated by brand familiarity (H3).
Finding 1: Domestic Origin Still Matters Despite Technological Change
The results provide clear evidence for a substantial home bias. Holding all product attributes constant, German brands received purchase likelihood ratings approximately half a scale point higher than non-German brands on a five-point scale. To put this into perspective: this origin premium is larger than the effect of a price reduction of roughly €8,400.
Importantly, an exploratory brand-level analysis showed that this advantage is not driven by a single dominant brand. All four German brands outperformed the foreign reference, with no statistically significant differences among them. Therefore, home bias is a broad, origin-based phenomenon and not just a single brand effect.
Finding 2: The Premium Segment Doubles the Effect
The second key finding concerns market segments. In the premium segment, home bias is roughly twice as large as in the non-premium segment. While foreign brands suffer a clear evaluation penalty at premium prices, German brands hold their ground almost entirely.
The interpretation is consistent with signaling theory: when financial stakes are high and quality is difficult to verify in advance, consumers fall back on credible quality cues. For German buyers, domestic origin appears to function as exactly such a signal, partially offsetting the price sensitivity that otherwise dominates premium purchases.
Finding 3: Familiarity Doesn’t Change the Picture
Contrary to expectations, brand familiarity did not moderate the home bias. A likely explanation is a ceiling effect: respondents knew on average 7.7 of the 8 brands presented, leaving too little variance to detect a moderating relationship. The theoretical mechanism should therefore be regarded as unresolved rather than disproven.
Stated vs. Revealed Preferences: Brand Ranked Last, But Still Mattered
Another intriguing result emerged from comparing stated and revealed preferences. When asked directly, respondents ranked brand as the least important attribute in their purchase decision. Yet the regression results show that brand origin exerts a substantial effect on their evaluations. This gap suggests that home bias operates partly below the level of conscious deliberation: consumers rely on origin cues without fully recognizing it.
What the Findings Mean for Managers and Policymakers
For German manufacturers, home bias represents a valuable but not unconditional competitive asset in their domestic market. It is strongest where margins are highest: in the premium segment. Origin-based brand equity should be leveraged in BEV marketing. Since the bias operates partly below conscious awareness, origin cues may be most effective when integrated subtly into brand communication rather than presented as explicit origin claims. But home advantage is no substitute for competitiveness. Price, driving range, and charging time all showed strong effects on purchase likelihood. Hence, domestic origin can tip the scales between comparable cars, but it cannot compensate for an uncompetitive product.
For foreign entrants, the findings quantify the headwind they face. Competing on objective specifications alone is not enough; a price or performance advantage must be large enough to compensate for an origin penalty. Entering through the non-premium segment, where home bias is weaker and price sensitivity dominates, may be the more viable approach.
For policymakers, the results offer a note of caution: consumer preferences in the BEV transition are not driven by product attributes alone. Origin-based preferences can slow the diffusion of competitive foreign offerings with implications for price competition and, ultimately, the pace of electrification.
The Bottom Line
Even in a market being reshaped by technological change and new competitors, domestic brand origin still has a measurable impact on consumer choice. This effect is strongest where the stakes are highest, and it appears to operate partly without consumers fully recognizing it. For an industry in transition, this is both a reassurance and a warning: the home advantage is real, but it is a preference in consumers’ minds, not an inherent property of the product. It cannot be taken for granted and must be earned with every generation of vehicles.