The German car industry, long seen as the backbone of Europe’s largest economy, is facing one of its toughest tests in decades.
Both manufacturers and suppliers are struggling with shrinking profits, falling demand, and massive transformation costs.
The latest blow came from Bosch, the country’s largest auto supplier, which announced plans to cut 13,000 jobs at its German Mobility division sites by 2030.
The crisis is not confined to one company. A wave of restructuring is sweeping through the sector, raising questions about the future of an industry that has shaped Germany’s economic identity for more than a century.
Carmakers fight falling margins
Volkswagen, Mercedes-Benz, BMW, Porsche and Audi all reported sharp declines in profits in recent quarters.
In response, most have introduced cost-cutting programmes that include efficiency drives, reduced investments and, in some cases, workforce reductions.
Severance payments and restructuring costs, however, are weighing heavily on current earnings.
Suppliers under even greater strain
For suppliers, the situation is even more precarious. When manufacturers build fewer cars, they need fewer parts.
With OEMs under financial pressure, negotiations over prices have become tougher, squeezing suppliers’ already thin margins.
Labour representatives warn that many companies are now at the brink of existential crisis.
Years of weak profitability, high investment needs for the shift to e-mobility, and uncertain returns are forcing painful decisions.
Structural causes behind the downturn
Several factors explain the current malaise. Demand in China, once a growth engine for German carmakers, has slowed significantly.
Domestic competitors there are offering far cheaper models that appeal more to younger buyers.
At the same time, German manufacturers have invested billions in electric vehicles, but the market uptake has been far slower than anticipated.
Experts argue that German brands misjudged the pace of change, falling behind in both e-mobility and autonomous driving technologies. This technological lag is eroding their global competitiveness.
Ripple effects across Germany
The consequences extend far beyond the automotive sector itself.
The car industry directly and indirectly supports millions of jobs and is a cornerstone of regional economies, especially in Baden-Württemberg and Bavaria.
As a common saying goes: “If Mercedes sneezes, Stuttgart catches a cold.” With the industry now struggling for breath, its role as a growth engine for Germany is under serious threat.
