Job Cuts Loom in Automotive Sector as Manufacturers and Suppliers Downsize

The automotive industry in Germany is facing significant challenges, with many manufacturers and suppliers announcing substantial job cuts. As the F.A.Z. Stellenradar indicates, nearly 38,000 positions are set to be eliminated in the first quarter of this year, marking the highest number of layoffs for this period since 2020. This trend comes despite the existence of about 23,700 new job openings, suggesting a troubling imbalance in the job market.

Approximately 25% of the companies planning to reduce staff belong to the automotive sector, a situation echoed by a survey from the consulting firm Horváth, which reveals that 68% of automotive manufacturers and suppliers are contemplating layoffs, including socially acceptable terminations. Furthermore, about 44% of companies across various sectors are considering short-time work arrangements.

Particularly alarming is the outlook for Southern Germany, where many medium-sized manufacturing firms, especially in the machinery and automotive industries, are located. According to Patrick Heurich, the study director, firms are primarily reacting by cutting costs related to personnel and materials, often overlooking strategic opportunities for market repositioning or portfolio adjustments that could foster long-term success.

The crisis affecting German car brands is also adversely impacting their suppliers. Continental, for instance, has been undergoing a significant restructuring process that includes substantial layoffs. The company announced last year it would cut 7,150 jobs, with over 80% of this reduction already executed. Additionally, in March, Continental revealed plans to eliminate another 3,000 positions globally, particularly in research and development, with about 1,450 of these cuts expected to occur in Germany.

As demand from the automotive sector declines, Contitech, a subsidiary of Continental, also plans to close five factories in Germany, affecting around 580 jobs. Moreover, the company intends to separate its Contitech division, which employs 39,000 individuals, by 2026, likely through a sale, as part of a broader strategy that includes spinning off its automotive division with 92,000 employees, with a public offering anticipated for September 2025.

This situation raises questions about the apparent contradiction of job cuts occurring alongside a skilled labor shortage. Heurich notes that companies reducing staff are also actively seeking new talent to pursue other business areas or to implement new technologies. The Horváth survey indicates that 24% of firms consider the lack of skilled workers a significant issue, and while internal retraining programs can mitigate some job losses, they cannot fully address the talent gap.

For instance, engineers disillusioned with the automotive sector may find opportunities in other industries, such as defense, which require expertise in industrialization, series production, and automation.

An example of the simultaneous downsizing and hiring can be seen with Biontech, which announced plans to reduce its workforce by 950 to 1,350 full-time equivalents across Europe and North America by 2027, particularly in response to decreased demand for COVID-19 vaccines. However, the company is also looking to create between 800 and 1,200 new positions, including 350 roles at its Mainz headquarters this year, as it expands its research into cancer treatments.

In large corporations, job cuts often occur through relatively gentle means. For example, Audi plans to eliminate 7,500 positions over the next four years while extending job security measures until 2033, thereby preventing layoffs due to operational reasons. The cuts will primarily target indirect roles outside of production, which diverges from the broader trend in the automotive sector, where many companies are focusing on reducing personnel costs within production lines.

Similarly, Deutsche Post AG is expected to cut 8,000 positions in its letter and parcel services, primarily through natural attrition, as it grapples with rising personnel costs following a recent tariff agreement. Despite increasing postage rates, the company faces challenges in offsetting these costs, leading to the need for job reductions.

In light of these developments, companies are also exploring various strategies to manage personnel expenses without resorting to layoffs. According to the Horváth survey, employers may choose to forgo salary increases, reduce bonuses, and encourage older workers to retire early.