Crisis in German auto industry deepens as VW, Bosch and other suppliers slash 55,000 jobs

Crisis in German auto industry deepens as VW, Bosch and other suppliers slash 55,000 jobs

Automotive News Europe — 2025-09-26

Automotive Industry

Robert Bosch’s plan to slash 13,000 additional jobs shows how the German auto industry’s decline is rippling through Europe’s biggest economy.

Automakers and their suppliers are struggling with waning demand, rising labor and energy costs and intensifying competition from fast-moving Chinese rivals. They have poured billions of euros into battery technology only to find out that the shift to electric vehicles will be slower than expected.

The pressures are forcing automakers and suppliers to make painful cutbacks. Bosch’s peers Continental, Schaeffler and ZF Friedrichshafen are also cutting jobs and expenses, while Volkswagen Group, Porsche and Ford are reducing staff and output to offset weak sales and President Donald Trump’s tariffs, which are intended to boost manufacturing in the U.S.

Overall, Germany’s auto sector has lost roughly 55,000 jobs over the past two years, according to the VDA auto industry trade group. Tens of thousands of additional positions are set to disappear by 2030, in an industry that employs more than 700,000 people.

“The announcement of significant layoffs at Bosch is still only the beginning of a major industrial restructuring in Germany,” said Marcel Fratzscher, president of the DIW German Institute for Research. “We will see many more layoffs and also bankruptcies in the coming years.”

The developments cast doubts over Chancellor Friedrich Merz’s pledge to lift Germany out of stagnation by unlocking hundreds of billions of euros in infrastructure and defense spending.

The German economy is set to grow 0.2 percent this year following two years of contraction, but manufacturers are still downsizing, and they are warning that high energy prices and red tape may force them to make future investments elsewhere. Merz’s party recently slipped behind the far-right Alternative for Germany in the polls.

China makes inroads while U.S. exports are hit by tariffs

Bosch’s plan to cut 3 percent of its global workforce by 2030 is indicative of a sector in crisis. Automakers led by BYD are taking over the EV market in China — which before the pandemic was the main growth and profit driver for Germany’s VW, BMW and Mercedes-Benz — and they are also making inroads in Europe with well-outfitted, affordable cars. Germany’s exports to the lucrative U.S. market are becoming more costly due to tariffs.

Several parts suppliers have idled capacity and are under pressure from automakers to lower prices even as their own input costs climb. Adding to the problem for Germany, its labor costs in manufacturing are more than twice as high as in Slovakia and the Czech Republic, according to Eurostat data.

At the same time, Asian competitors are winning share with cheaper batteries, motors and electronic components, eroding margins for traditional manufacturers.

VW is undergoing a massive restructuring in Germany and has pledged to cut 35,000 jobs in the country by the end of the decade. Porsche last week announced a pullback from EVs and issued its fourth profit warning this year. Together with sibling Audi it is also shedding thousands of positions as the brands struggle to sell their luxury EVs.

Ford earlier this month said it will eliminate an additional 1,000 positions at its Cologne EV plant due to poor demand. The U.S. company has been steadily retrenching in Europe, paring back production, trimming staff and shutting operations in an effort to streamline a business that has long lagged its North American arm.

Fewer workers needed for EVs

Bosch’s cuts show “that structural change is now reaching the heart of Germany’s knowledge-intensive manufacturing,” said Monika Schnitzer, chair of the German Council of Economic Experts. The shift to EVs means fewer workers are needed and policymakers need to support retraining workers so they can move into growing sectors like defense, she said.

Merz has tried to bolster confidence with greater arms spending and his €100 billion “Made for Germany” investment initiative — which Bosch backed — but hopes that some of the auto sector’s jobs can be saved by underused car and parts factories taking on defense contracts so far have not materialized.

“Both the U.S. and China are pushing to expand domestic manufacturing at the expense of foreign competitors,” said Sebastian Dullien, scientific director of the Hans Böckler Foundation’s IMK institute. “The challenge for the German government is to prevent current losses of value added and jobs from causing permanent scars in the German economic fabric.”

Bosch cuts ‘stab in heart’ of German industry

At Bosch, the deepest cuts will hit the company’s historic base in the Stuttgart region. Thousands of jobs will go at sites making everything from diesel components to small electric drives.

Founded in 1886 as a workshop for precision mechanics and electrical engineering, Bosch grew into one of Germany’s most emblematic industrial groups. After the fall of the Berlin Wall, it rapidly expanded its manufacturing base in eastern Germany and across Central and Eastern Europe. It also pushed into Asia, making China one of its largest markets and production centers.

While the company has expanded into energy, household appliances and industrial technology, its automotive business remains the core of the group and a bellwether for the health of German manufacturing.

“The news from Bosch is a final wake-up call, a stab to the industrial heart of Germany,” said Nicole Hoffmeister-Kraut, minister for economic affairs, labor and tourism in the state of Baden-Württemberg, where Stuttgart is the capital.

The federal government should adopt more business-friendly policies and called on the European Union to drop its 2035 deadline for phasing out combustion engines, Hoffmeister-Kraut said. “It’s five past midnight for our auto industry.”