German autos sector slashes jobs as economic woes bite

A perfect storm of industry and economic challenges have weighed on Germany’s autos sector, which has shed tens of thousands of jobs over a one-year stretch to the end of June.

Over that period, Germany’s autos industry, one of the European country’s largest sectors, has seen job cuts of close to 7% of the workforce, or around 51,500 positions, according to new analysis from EY based on data from the German statistics office Destatis.

Overall job losses across the German industry amounted to around 114,000 in the 12 months to June 30 this year, the study noted. The figures suggest almost half the cuts were incurred by the autos sector.

“No other industrial sector has recorded such a strong reduction in employment,” the report said, according to a CNBC translation. The study flagged that 112,000 jobs have been cut in the autos sector, compared to the 2019 period preceding the Covid-19 pandemic.

Jan Brorhilker, managing partner of the assurance division at EY in Germany, said in a press release that the job reductions came in a response to the difficult situation of the German auto industry.

“Massive profit declines, overcapacities, and ailing foreign markets make a marked reduction of jobs impossible to avoid,” he said, according to a CNBC translation.

EY’s report also noted that revenues in the sector pulled back 1.6% in the second quarter of 2025 compared to the same period in the previous year. German auto giant Volkswagen, for one, reported a sharp drop in second-quarter profit and lowered its full-year guidance.

The decline in the auto sector is notably a smaller drop than the 2.1% loss in revenues that the overall German industry is facing.

Germany’s auto industry has long battled a multitude of challenges, such as stark Chinese competition on costs and innovation, as well as difficulties to gain ground in the electric vehicle race, which some auto makers and analysts have attributed to federal government bureaucracy and regulation.

U.S. President Donald Trump’s trade policy has added to concerns. Germany, and especially its autos sector, are heavily export oriented and count the U.S. as one of their biggest markets, where the ‘Made in Germany’ label has historically been seen as a sign of quality.

Recent data from Destatis showed that auto and auto part exports to the U.S. declined by 8.6% in the first half of 2025, compared to the same period last year. Auto makers have also repeatedly warned of the potential impact of tariffs and surrounding uncertainty.

The industry may enjoy some relief after details of the U.S-EU trade agreement emerged earlier this months. Autos will be subject to 15% duties, but only after the EU makes legislation changes to reduce its industrial levies.

The state of Germany’s overall economy has also been a headwind for the autos sector, with the country’s annual gross domestic product declining in both 2023 and 2024. This year also appears to be off to a slow start: after Europe’s largest economy recorded 0.3% growth in the first quarter, the latest figures for the second quarter indicated a 0.3% decline.

Looking ahead, EY’s Brorhilker says he expects German auto exports to both the U.S. and China to stay under pressure, with the former being impacted by tariffs and the latter by weakening demand, which is also a domestic issue.

As various German industrial giants are currently undergoing restructuring or cost reduction programs, “the number of industry jobs will keep falling,” Brorhilker said.