The German automotive industry, long considered a symbol of stability and technological leadership, is experiencing one of its deepest crises in decades. According to a new report published by DW, the industry has lost 51,500 jobs in the last 12 months, accounting for nearly 7% of total employment in the country's automotive sector.
Scale of reductions
The job cuts look particularly alarming against the backdrop of the overall situation in the industry: almost half of all lost jobs in Germany's manufacturing sector over the year were in automotive production. Since 2019, according to the report, the German automotive industry has already lost 112,000 jobs, with half of that number occurring in just the last year.
This indicates that the problems are no longer local or temporary. We are dealing with a systemic crisis based on structural changes in the global automotive industry.
Reasons for the crisis
Electrification of transport.
The transition to electric vehicles requires different technologies and fewer workers in production. Internal combustion engines consist of thousands of parts and complex supply chains, while electric motors are significantly simpler to assemble. This automatically reduces the need for labor.Increased competition from China.
Chinese manufacturers like BYD and Nio are capturing the European electric car market due to lower prices and high technology. Germany has found itself in the role of a follower, which impacts employment and domestic investments.Global demand crisis.
High interest rates in Europe and the US, inflation, and declining purchasing power are leading to a drop in demand for new cars.Automation and digitalization.
Modern factories require fewer workers: robots, algorithms, and artificial intelligence are gradually replacing traditional labor.
Consequences for Germany
Social risks: rising unemployment in industrial regions such as Bavaria and Baden-Württemberg may lead to increased social tension.
A blow to unions: traditionally strong automotive unions (IG Metall) are losing influence, and workers are facing reduced guarantees.
Decline in tax revenues: the automotive sector is one of the key contributors to Germany's budget, and the drop in production inevitably reduces tax income.
Loss of leadership: Germany risks losing its position as the technological and industrial flagship of Europe in the automotive sector.
What’s next?
Experts agree: the German automotive industry is on the brink of the largest transformation in the last 50 years. To maintain leadership, the following are necessary:
massive investments in the development and production of electric vehicles;
strategic partnership with Asian battery manufacturers;
government support in the form of subsidies and tax benefits;
retraining of hundreds of thousands of workers.
Without these steps, Germany risks repeating the fate of the British automotive industry, which rapidly lost ground to foreign corporations in the 70s and 80s.