Key Takeaways
1. Job Losses in the Automotive Sector: The German automotive industry has cut 6.2% of jobs, reaching the lowest employment level in 14 years, with nearly 50,000 positions lost last year.
2. Bankruptcies Among Suppliers: The number of bankruptcies among domestic suppliers has surged to a 14-year high, with small and medium-sized enterprises facing severe financial struggles.
3. Declining Sales for German Automakers: German car brands are experiencing a significant drop in sales, particularly in the US market, with a reported 1.6% sales decrease for manufacturers and suppliers in 2025.
4. Shifts in Trade Balance: The trade balance has dramatically changed, with EU car exports to China dropping by 34% and imports from China rising to a record 22 billion euros, resulting in a deficit.
5. Impact on Regional Employment: Key German states like Saarland and North Rhine-Westphalia are heavily impacted, with employment in the automotive sector dropping over 20% since 2019, affecting local economies significantly.
A terrible wave of bankruptcies is hitting local suppliers hard. In areas like Saarland and North Rhine-Westphalia, tens of thousands of jobs in the German automotive sector are disappearing for good. The European car market is currently experiencing a major transformation.
Shifts in the Market
Asian competitors are now actively pursuing an export strategy that is changing the traditional trade balance. Meanwhile, German car brands are seeing a significant drop in sales in the US market. The industry trends shared by EY highlight this ongoing decline for German automakers in detail.
The EY report shows that the persistent lack of demand is having a direct impact on established car manufacturing sites within Germany. Car makers and their suppliers finished 2025 with a sales drop of 1.6 percent.
Employment Crisis
The situation for workers is even more alarming. The automotive sector has slashed 6.2 percent of jobs, bringing total employment to its lowest level in 14 years, with around 725,000 individuals still working. Last year alone, nearly 50,000 positions were cut across Germany. These layoffs are severely affecting individual federal states.
In Saarland, where one in twenty jobs is linked to the automotive industry, employment dipped by nearly eleven percent in 2025. Since the pre-COVID year of 2019, key states like North Rhine-Westphalia, Hesse, and Thuringia have experienced a loss of over 20 percent of jobs in this field. Only Brandenburg is seeing a significant rise, with an increase of more than 200%.
Suppliers in Distress
The heart of this economic upheaval lies with domestic suppliers. Here, the struggle for survival has reached alarming levels. The number of bankruptcies among companies has surged to a 14-year high. While major car makers still rely on their financial cushions, small and medium-sized enterprises are simply running out of options. Supplier revenues have dropped four times more than those of the manufacturers. The impact on employment is dire: since 2019, nearly one in four jobs in the German supplier sector has vanished. Factory closures are now a common part of life.
The global market is delivering a final, devastating blow to Europe’s struggling automotive sector. Exports to the USA, still the biggest market for German cars with revenues of 28.5 billion euros, fell sharply by 18 percent last year. The decline in Asia is even worse. China has fallen from second to sixth place as an export destination, with exports to the country reaching their lowest since 2009.
At the same time, the trade balance with China has completely flipped, resulting in a historic embarrassment. Last year, car exports from the EU to China dropped by an alarming 34 percent, totaling just 16 billion euros. In stark contrast, Asian companies have flooded the European market. Imports of new vehicles and parts from China skyrocketed to a record 22 billion euros. This means that, incredibly, for the first time, the value of car imports from China has surpassed the value of European exports to China. A huge export surplus of 23 billion euros in 2019 has now turned into a significant deficit of six billion euros.
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