German Auto Industry Faces Severe Decline with Job Losses and Supplier Insolvencies

The German automotive industry experienced a significant downturn in 2025, continuing a multi-year decline that has severely impacted revenues, employment, and supplier stability. Following a 5% revenue drop in 2024, the sector's revenue fell by another 1.6% in 2025. Employment in the industry plummeted by 6.2% to 725,000 workers, marking a 14-year low and reflecting a loss of nearly 50,000 jobs nationwide, with Saarland and Schleswig-Holstein among the hardest hit regions.

A report by EY highlighted an alarming surge in insolvency filings among auto suppliers, reaching a 14-year high with 39 cases recorded between January and November 2025, up from 29 the previous year. Suppliers faced a 4% revenue decline—over twice as severe as the manufacturers—and an 11% drop in employment, culminating in a loss of 29,000 jobs in 2025 alone and a total of 73,000 jobs lost since 2019.

The industry's struggles are attributed to weakened European car markets post-pandemic, geopolitical tensions, and high vehicle prices suppressing consumer demand. Export challenges further aggravated the situation; exports to the USA dropped by 18%, while exports to China fell by one-third. Conversely, imports from China increased by 8%, deepening the trade deficit. This dynamic intensified overcapacity issues within the German auto sector and incentivized some companies to relocate operations outside Germany due to cost and bureaucratic pressures.

Additionally, the slow pace of electric vehicle adoption has complicated recovery efforts, as many firms invested heavily in electric mobility without achieving expected market traction. Meanwhile, Chinese manufacturers have gained a stronger foothold in Europe, altering competitive dynamics.

The report warns that without strategic intervention, further insolvencies and plant closures among suppliers are likely, with manufacturers also expected to face growing economic pressures in the near future.