German Automotive Suppliers Face Crisis Amid Transformation Pressures and Market Uncertainty

The German automotive supply industry, especially in the Saxony-Anhalt region including Harz, is grappling with severe economic challenges and transformation pressures as it prepares for a fundamental industry shift by 2025. Many suppliers are under significant strain due to insolvencies and fear of job losses. Companies such as Bohai Trimet in Harzgerode and Boryszew in Gardelegen have filed for insolvency, impacting hundreds of employees. Meanwhile, the profitable IFA Group, employing 2,200 people, is being sold to a US corporation. Experts warn that failure to adopt emerging technologies like battery systems, control units, and sensor technology risks leaving companies behind in the evolving automotive landscape.

Production volumes remain below pre-pandemic levels, exacerbating financial pressures on suppliers who traditionally produce combustion engine components. The Association of the Automotive Industry warns that as many as 190,000 jobs could be lost nationwide in the automotive sector by 2035. To survive, suppliers are urged to diversify into alternative fields. Jens Lücke, chairman of the Sahreg automotive network, noted that while challenges persist, there are opportunities to engage with sectors such as mining and shipbuilding, which still require engines and components.

Amidst this sector-specific turmoil, the broader German economy also shows widespread cautious outlooks for 2026. A survey from the ifo Institute reveals that 26% of German companies expect worsening business conditions, with 59% anticipating no change and only 14.9% hoping for improvement. Skepticism is widespread across sectors including retail and construction, although the electrical equipment industry maintains a more positive stance. Klaus Wohlrabe from ifo remarked on the lack of a "spirit of renewal" throughout German industries, reflecting the challenging economic environment.

Looking ahead, the Saxony-Anhalt Ministry of Economics anticipates ongoing transformation pressures on automotive suppliers and stresses the importance of embracing innovation and alternative business models to remain competitive as the transition toward electric mobility accelerates. Companies already focusing on electromobility appear better positioned for the future, underscoring the critical need for adaptability in Germany's key automotive supply sector.