German Automotive Sector Faces Sharp Job Decline Amid Calls for Strategic Industrial Policy

The German automotive industry is experiencing a profound employment crisis in 2025, marked by significant job losses that reflect wider challenges across the manufacturing sector. According to the Federal Statistical Office in Wiesbaden, the manufacturing sector shed 120,300 jobs, a 2.2% decline over the past year. Within this landscape, the automotive sector reported a steep reduction of 48,700 jobs, down 6.3%, bringing employment to 721,400—the lowest level since mid-2011.

Job losses disproportionately affected suppliers rather than original equipment manufacturers (OEMs). Among automotive suppliers, employment fell by 4.0% in body and trailer manufacturing and plummeted 11.1% in parts and accessories manufacturing. Other manufacturing areas like machinery and chemicals also saw declines, with machinery employment dropping 2.2% to approximately 934,200 and the chemical sector down 1.2% to 323,600 jobs. The food industry remains a rare exception, growing 1.8% to 510,500 employees.

Sebastian Dullien, scientific director at the Institute for Macroeconomics and Economic Research (IMK), emphasized that while the current reductions mirror diminished production and orders, they are still moderate, indicating potential to preserve many jobs if appropriate measures are taken. Dullien advocates for a comprehensive German industrial policy to counter aggressive economic pressures from global competitors such as the US and China. He urged the EU to define critical industries and leverage the internal market to strengthen European manufacturing.

Echoing the need for commitment to Germany, Christiane Benner, head of the IG Metall union, stressed the importance of companies investing domestically, highlighting Germany's solid workforce as a key asset. Benner called for an end to unproductive debates on longer working hours and countered stereotypes about laziness. She noted sectors like aerospace, defense, and medical technology as current bright spots in the German economy.

Overall, these developments underline a challenging year for the German automotive and manufacturing industries, prompting calls from experts and labor leaders for robust strategies to sustain employment and industrial strength.