The automotive industry cuts 51,500 jobs

2025-08-28 08:52:00, Kosova & Bota CNA

This decline amounts to almost 7% of the workforce in the German automotive sector. The decline in exports to China and the US is contributing to this situation, with new tariffs raising entry barriers in these key markets.

The steady decline in employment figures in German manufacturing continues, with the country's esteemed automotive industry leading the way, according to a new study by accounting giant EY (formerly known as Ernst & Young) based on data from the government statistics office.

EY recorded the loss of approximately 51,500 jobs in the automotive industry over the course of a year, equivalent to 6.7% of the sector's total workforce. This represents almost half of the 114,000 industrial jobs lost in the same period.

The phenomenon also appears to be accelerating: since 2019, before the COVID-19 pandemic, approximately 112,000 jobs have been eliminated in the automotive industry in Germany, almost half of them in the last 12 months.

Exports to the United States and China are already falling rapidly, and renewed tariff disputes with both countries are unlikely to help.

US and China contribute to job losses in the automotive industry

Sales of German industrial companies fell by 2.1 percent in the second quarter of 2025, well above the overall negative growth of 0.3 percent. Only the electronics industry improved its sales during the quarter, while automotive companies' revenues fell by 1.6 percent.

Exports to the United States, Germany's single largest market, fell by about 10%. Jan Brohriker of accounting giant EY predicts "no improvement on the horizon" given President Donald Trump's imposition of new, slightly higher 15% tariffs on vehicles.

But the sharp decline in exports to China is also affecting the automotive industry. Germany's second most profitable export market, China, has fallen to sixth place in the ranking, with an annual decline of 14% in the last quarter.

"The United States and China are currently a major source of concern," Brohriker said. "The Chinese market has long been particularly attractive to the automotive industry, with very high profit margins. But in the meantime, the situation has changed, especially for foreign automakers: demand is falling drastically and sales are declining."

The EU and China have recently been embroiled in a tariff battle, particularly over cheaper Chinese electric vehicles, and China's rapidly growing auto industry is increasingly meeting domestic demand.

US tariffs put pressure on German carmakers

Why Germany is at the center of austerity measures

Major companies such as Mercedes-Benz, Volkswagen, Audi, Bosch, Continental, ZF and Porsche have all launched cost-cutting programs, and these cuts often start in Germany, not at production facilities abroad.

"German carmakers and parts manufacturers are logically reacting to the difficult industry situation with an effort to cut costs," says EY's Brohriker. "The massive drop in profits, excess production capacity and weakening export markets make significant job cuts inevitable, especially in Germany, where management, administration and research and development positions are concentrated."

EY predicts that the employment decline will continue, citing ongoing restructuring and cost-cutting plans that will continue to lead to layoffs. It also predicts a more challenging future for young people.

"The automotive industry and the mechanical engineering sector are employing far fewer young people than in the past," said Mr. Brohriker. "The job market for young engineers is becoming tougher and many of them will have to change careers. We will see an increase in unemployment among university graduates, something Germany has not seen for a long time."/ DW