The steady decline in employment figures in German industry continues, with the country’s automotive industry leading the way, according to a new study by accountancy giants EY (formerly known as Ernst & Young) based on data from the government statistics office.
EY recorded approximately 51,500 job losses in the automotive industry during the year, representing 6.7% of the sector’s total labour force. This accounted for almost half of the 114,000 manufacturing jobs lost over the same time period.
The phenomenon also appears to be accelerating: since 2019, before the COVID-19 pandemic, Germany has lost around 112,000 jobs in the automotive industry – almost half of them in the last 12 months.
Exports to the US and China were already falling fast, and new tariff disputes with both countries are unlikely to help (FILE: 1 April 2025) Image: Sina Schuldt/dpa/Picture alliance
The US and China are contributing to job losses in the auto industry
Turnover of German industrial companies fell 2.1 per cent in the second quarter of 2025, much more than the negative 0.3 per cent growth overall. Only the electronics industry improved turnover in the quarter, with automotive companies’ revenues falling 1.6 per cent.
Exports to the US, Germany’s largest single market, fell about 10%, and EY’s Jan Broker predicts that “no improvement is in sight” given President Donald Trump’s imposition of new, slightly higher tariffs – by 15% for cars.
But the sharp drop in exports to China is also affecting the auto industry. Germany’s second most lucrative export market, China slipped to sixth place in the rankings with a 14% year-on-year drop in the latest quarter.
“The US and China are currently the cause of major concerns,” Brochricker said. “The Chinese market has been particularly attractive to the automotive industry for a long time, with very large margins. meanwhile, the wind has turned, especially for foreign carmakers: demand is falling sharply and turnover is collapsing.”
Recently, the EU and China have been fighting their own tariff battle, especially over cheaper electric cars in China, and the fast-growing Chinese car industry is itself covering more and more of the domestic demand.
Why Germany is at the centre of belt tightening
Major firms including Mercedes – Benz, Volkswagen, Audi, Bosch, Continental, ZF and Porsche have launched cost-cutting programmes – and often these cuts start close to home in Germany, rather than at foreign manufacturing plants.
“German car companies and component manufacturers are logically responding to the difficult industry situation with savings,” said EY’s Broker. “Sharp declines in profits, overcapacity and weakening export markets make significant job cuts inevitable, especially in Germany, where management, administration and R&D jobs are based.
EY predicts that job losses are likely to prove a permanent trend, citing ongoing restructuring and cost-cutting plans that will continue to lead to layoffs. It also predicts a more difficult future for aspiring young engineers leaving school or university.
“The automotive and engineering industries are hiring significantly fewer young people than in previous years,” Broker said. “The labour market for young engineers is becoming uncomfortable, many will have to reorient themselves. there will be an increase in unemployment among university graduates, something Germany has not experienced for a long time.”
Edited by: Wesley Dockery