Auto Industry Faces Job Cuts: A Troubling Trend Ahead?

The ongoing crisis within the German automotive sector is having a profound impact on employment. Recent analysis from the consulting firm EY reveals that nearly 19,000 jobs were lost in 2024, leaving just over 761,000 individuals employed in the industry by year-end. This marks a significant decrease from approximately 780,000 positions held the previous year.

According to EY's study, which utilized current statistics from the Federal Statistical Office and the Employment Agency, the analysis focused on companies with a workforce of 50 or more. EY's automotive expert noted that the automotive industry in Germany is undergoing a severe and comprehensive crisis. The challenges range from weak consumer demand due to the persisting economic downturn, high operational costs, and the financial strain of juggling both combustion engine and electric vehicles.

Investment in electric mobility has proven costly, with insufficient market gains to show for the expenditures. Additionally, the diminishing demand from the Chinese market has further exacerbated these issues.

As a response to these challenges, manufacturers are anticipated to implement significant cost-cutting measures, which are expected to lead to further job reductions. The comparatively modest job losses observed in the previous year are seen as the beginning of a painful and unavoidable contraction process within the sector.

Given the recent geopolitical developments, there is a likelihood of production shifts to the United States or China, which could accelerate job losses in Germany. Despite these dire predictions, there is cautious optimism regarding the potential for automotive manufacturers to restore higher profit margins in the medium term, provided that the issues are addressed comprehensively.

However, the situation remains critical for many suppliers, as they face increasing pressures amid a sluggish ramp-up of electric vehicle production, which is significantly affecting their profit margins.

The revenue for the German automotive industry decreased by five percent last year, totaling 536 billion euros after a period of continuous growth over the preceding three years. Major manufacturers and suppliers, including Mercedes-Benz, Porsche, Volkswagen, Bosch, ZF, Schaeffler, and Continental, have announced cost-reduction strategies that could result in the elimination of thousands of jobs in the coming years.