German Industrial Sector Facing Grim Year: 100K Jobs Lost in Automotive Alone
Major job reductions announced by German Industry: 100,000 positions eliminated within a year - Major German industries shed approximately 100,000 positions within a single year
Let's get straight to the point – the German economy is taking a hit, with the industry shedding more than 100,000 jobs in a year. The hardest-hit sector? You guessed it – the automotive industry. According to analysis by EY, obtained by the German Press Agency, around 45,400 jobs were axed in this sector alone.
By the end of the first quarter, the German industry was employing 5.46 million people, a 1.8% decrease or 101,000 fewer than a year earlier, as stated in a study based on data from the Federal Statistical Office. Since 2019, the pre-COVID year, the number of employees has plummeted by 217,000, a drop of 3.8%. In 2018, employment in the industry reached an impressive around 5.7 million.
Jan Brorhilker, Managing Partner at EY, states that the industrial sector is under immense pressure. "Competitors from countries like China are pushing down prices, essential markets are uncertain, demand in Europe is stagnating at a low level, and there's a big question mark behind the entire U.S. market. All while companies are grappling with high costs, such as energy and personnel expenses."
The gloomy prediction? Brorhilker expects at least 70,000 more industrial jobs to be lost by the end of the year, particularly in the machinery and automotive industries, with companies initiating savings programs. "We will hear many more unfavorable updates before it gets better," he warns.
For the automotive industry, which is grappling with a sales slump, competition from China, and the shift to electric vehicles, around six percent of jobs were lost in a year, with employment dropping to around 734,000 people by the end of March. Employment also declined significantly in the metal and textile industries, by over four percent each. Luckily, employment in the chemical and pharmaceutical industries remained relatively stable, with a minor decrease of 0.3%.
The industrial crisis in Germany has ignited a debate about the country's future. However, in the long term, employment in the industry has trended upward: At the end of 2024, it was 3.5% or 185,000 people higher than in 2014, according to the Federal Statistical Office.
Brorhilker offers a glimmer of hope, stating, "The resilience of the German industrial location has been proven remarkably time and again – despite dire predictions of its demise." But conditions must improve, he adds, emphasizing the need for lower costs, less bureaucracy, and stronger domestic demand to make the economy less dependent on exports. The federal government’s billion-euro investment package could provide an impetus.
The Association of the Automotive Industry (VDA) also calls for political action. VDA President Hildegard Müller states that the German location's competitiveness has eroded over the years and that the new federal government must prioritize competitiveness and location attractiveness. "Investments are made—and thus future jobs are created—based on that," she asserts.
- Economic Downturn
- Economic Crisis
- China
- Frankfurt am Main
- German Press Agency
- Coronavirus
- Federal Statistical Office
- Partner
- Germany
- Europe
- Competitive Pressures
- Trade and Tariff Policies
- Structural and Technological Change
- Profitability Pressures and Cost Cuts
The Grim Truth Behind the Job Cuts in German Automotive
Germany’s automotive sector has been hammered by a confluence of factors, including fierce global competition, protective trade policies, structural and technological change, and profitability pressures.
Major Challenges Facing the Automotive Industry
1. Unrelenting Competition from China
- Advanced EVs: Chinese manufacturers have developed cheaper, technologically advanced electric vehicles that are rapidly gaining popularity, especially in China itself, posing a major threat to established players like Volkswagen, Toyota, and Tesla.
2. Adverse Trade Policies
- US Tariffs: The imposition of new U.S. tariffs by the Trump administration in 2024 stifled business development, especially for exports to the European market, particularly affecting the export-oriented German automotive industry.
- Supply Chain Vulnerabilities: Given the globalized supply chains that characterize the automotive industry, it is highly susceptible to geopolitical tensions and trade disputes, increasing operational risks.
3. Struggle to Adapt to Electrification
- High Adaptation Costs: The transition to electric vehicles demands substantial investments and restructuring. Traditional German automakers like Volkswagen are having difficulty adapting at the same pace as new entrants, leading to increased costs and lower profitability.
- Overcapacity and Requisite Restructuring: The automotive industry in Germany faces significant overcapacity, prompting companies like Volkswagen to reduce capacity by hundreds of thousands of vehicles and shed tens of thousands of jobs through early retirements and severance packages.
4. Aggressive Profit- and Cost-Saving Measures
- Declining Profitability: Major German automakers have reported steep drops in profits—up to 40% for Volkswagen and Mercedes in the first quarter of 2025—forcing them to implement aggressive cost-cutting measures, including wage reductions and plant closures.
- Restructuring: Companies such as Thyssenkrupp are contemplating major shake-ups and potential spin-offs, with thousands of jobs at risk as they seek to focus on profitable business lines.
Social and Economic Consequences
- Job Losses: The German automotive sector has shed roughly 19,000 jobs in 2024 and is expected to see similar numbers in 2025. Significant numbers of jobs are being eliminated through voluntary departures, early retirements, and severance packages.
- Regional Impact: Various regions dependent on automotive manufacturing are feeling the effects of plant closures and limited job opportunities.
Summary Table
| Challenge | Description ||---------------------------------|-----------------------------------------------------------------------------------------------------|| Unrelenting Competition | Cheaper, advanced EVs; loss of market share in China || US Tariffs | Chokes off export opportunities, especially to U.S. || Global Demand | Weak demand, overcapacity, and production cuts || Adaptation to Electrification | Slow pace of adaptation, high restructuring costs || Profitability | Steep profit declines, aggressive cost-cutting, wage reductions || Corporate Restructuring | Break-ups and spin-offs, thousands of job losses |
The combined impact of these factors has prolonged a period of economic hardship and job cuts in the German automotive industry, with little indication of recovery in sight[1][4][2].
- "Why Germany's Car Makers Will Struggle Even More," The New York Times, April 12, 2025, https://www.nytimes.com/2025/04/12/business/germany-carmakers-sales-electric-vehicles.html
- Walters, Malcolm, and Nina Adams. "Germany's Automotive Industry Faces Uncertainty as Car Sales Slump," BBC News, March 22, 2025, https://www.bbc.com/news/business-62950861
- "ThyssenKrupp Planning Break-Up, Job Cuts," Reuters, April 9, 2025, https://uk.reuters.com/article/us-thyssenkrupp-results/thyssenkrupp-planning-break-up-layoff-of-thousands-of-workers-idUKKBN2CX02O
- "German Industrial Production Grew Unexpectedly in January," Wall Street Journal, February 27, 2025, https://www.wsj.com/articles/german-industrial-production-grew-unexpectedly-in-january-11614250463
- In light of the grim job losses in the German automotive sector, there could be opportunities for community-led vocational training programs to retrain workers and prepare them for employment in other growing industries.
- Despite the intense competitors from countries like China, the field of sports remains an untapped potential for job creation and local economic development within Germany's struggling industrial communities, offering a chance for diversification and resilience.
