What’s driving the decline in Europe’s automotive industry jobs?

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On Monday, September 21, workers across the German automotive industry came together in protest, with tens of thousands of employees from Audi, BMW, Mercedes-Benz, Porsche, the Volkswagen (VW) Group and the Tier 1 and Tier 2 suppliers attending some 280 demonstrations. The protests underscored growing concerns about automotive industry jobs as automakers and suppliers seek to cut costs amid mounting pressure on Europe’s automotive sector. Workers were there to make clear to company management that there would be no easy route to radically altering the industry’s cost base.

In the days before the collective action, the Volkswagen Group issued new financial guidance cutting its forecast operating margin from its previous target of 3–4% to 1%. A day after the demonstrations, Mercedes production chief Michael Schiebe told workers gathered at the automaker’s plant in Sindelfingen, Germany, that closures loomed if costs were not reduced. “Our clear goal is to maintain all of our German locations,” Schiebe said, adding that this required a joint commitment to cost measures. “If we are unable to do this, we will have to close one German assembly plant and one German powertrain plant.”

These are the latest developments in a seemingly constant stream of negative news about the German automotive industry and its future. But Germany is hardly alone. Across Europe, automotive job losses are accelerating as the industry confronts weak production, global competition, high costs and the transition to electric vehicles (EVs).

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Automotive industry jobs are disappearing across Europe

The pressure now confronting automotive workers in Germany reflects a much broader contraction in Europe’s manufacturing workforce. According to CLEPA, the European suppliers’ association, the sector is facing unprecedented workforce reductions. In 2024 and 2025 alone, suppliers announced 104,000 job cuts, with only 7,000 new roles expected to be created in 2025, primarily in electrification and software. This stark imbalance highlights the difficulty of creating new jobs quickly enough to offset losses in traditional manufacturing.

The German automotive industry reflects Europe’s wider job losses

Germany provides a clear example. The country’s automotive workforce shrank by 42,300 jobs (5.8%) in the year through June 2026, reaching its lowest level since 2005, according to the Federal Statistical Office. Employment at OEMs fell 6.1%, while parts and accessories suppliers saw a 7.6% reduction. Further workforce reductions have already been announced: Volkswagen Group plans to cut another 50,000 jobs, Porsche 5,000 and BMW 8,000 by 2027.

The EV transition is reshaping Europe’s manufacturing workforce

The transition from internal combustion engine (ICE) vehicles to battery electric vehicles (BEVs) is also changing how many workers automakers and suppliers need—and what skills those workers require.

Intensifying competition from China and US tariffs is often cited as major sources of pressure on European OEM and supplier profitability and competitiveness. But the shift to BEVs is creating another structural challenge for automotive industry jobs. BEVs are mechanically simpler than ICE vehicles and require fewer components. They generally have no transmission or gearbox, exhaust system, clutch, conventional radiator or alternator—components that the industry has been producing for more than a century.

As a result, while demand for engineers and software specialists is growing, traditional manufacturing employment is shrinking. CLEPA’s Secretary General Benjamin Krieger notes that the pace of job losses has exceeded even the most pessimistic earlier forecasts, with suppliers struggling to recruit qualified technical staff while simultaneously cutting thousands of manufacturing roles.

High costs and weak production put more jobs at risk

Automakers and suppliers are also under pressure from weak production volumes: EU vehicle output in 2025 is estimated to be 20% below 2019 levels. Suppliers face tough decisions about whether to close plants, relocate production or reduce payrolls to align with a smaller market. Germany’s cost structure exacerbates these challenges. Manuel Kallweit of the German Association of the Automotive Industry (VDA) points to rising energy costs and a lack of structural reforms as factors that have eroded the country’s productivity advantage.

Meanwhile, the EU’s aggressive CO2 targets and regulatory framework are accelerating the shift away from internal combustion engines, but the transition is far from seamless. Factories specializing in combustion-related components cannot instantly pivot to battery production. Kallweit warns that inflexible policies—such as the rapid removal of plug-in hybrids—risk eliminating jobs before alternatives are ready. He has called for a more technology-neutral approach to preserve employment and industrial capacity.

More automotive industry job losses are on the horizon

The automotive industry outlook suggests that workforce reductions are likely to continue. CLEPA projects that up to 350,000 supplier jobs could be at risk by 2030 if current trends persist. The VDA forecasts a further loss of 125,000 automotive industry jobs in Germany by 2035, on top of the 100,000 already eliminated since 2019.

Despite massive investments—€250 billion in electrification and €450 billion in R&D since 2015—there is no guarantee that new jobs in batteries, software and charging infrastructure will be created in the same regions as those lost. The European automotive industry’s employment crisis is a textbook case of technological disruption colliding with global economic forces and policy-driven transformation. The CLEPA data paints a sobering picture: automotive job losses are accelerating, and the new roles arising from electrification and digitalization are not sufficient—either in number or location—to offset the decline in traditional manufacturing employment. In addition, high energy costs, inflexible labor markets and slow policy reform have eroded Europe’s historic productivity edge, particularly in Germany.

The shift to EVs and software-defined vehicles creates new opportunities but requires different skill sets, primarily in engineering, IT and battery technology. These roles are not only fewer in number but also geographically misaligned with regions experiencing the deepest job losses. Retraining and reskilling initiatives are essential but face barriers in scale, speed and worker mobility.

What’s next for Europe’s automotive workers?

If Europe’s automotive industry cannot address its structural cost disadvantages and regulatory hurdles, there is a real risk that new investment will flow elsewhere—especially to areas with faster-growing markets and more favorable business environments.

However, while industry leaders face difficult and urgent decisions, compulsory redundancies or plant closures are unlikely to proceed without significant industrial action. As Thorsten Gröger, IG Metall’s regional head for Lower Saxony and Saxony-Anhalt, home to Volkswagen’s headquarters, put it: “We won’t stand by while a key industry is hollowed out step by step. The workers didn’t cause the failures of recent years. They shouldn’t now be made to pay the bill for them.”

How Europe manages those pressures will help determine not only the industry’s competitiveness, but the future of automotive industry jobs across the region.