Automobile industry: More than every second company plans job cuts

Boarding on e-cars - Automotive industry: More than every second company plans workforce reduction

In the German automobile industry, according to a survey, numerous jobs are on the brink. More than half of the questioned companies in the sector plan to reduce staff in Germany, as revealed by a survey conducted by the consulting firm Horváth among industry executives. Reasons for this are mainly the high cost pressure and new competition, particularly from China.

59% of the surveyed companies stated they plan to reduce the workforce in Germany over the next five years, with 14% even planning significant reductions. On the other hand, only 15% are planning to expand their workforce.

The situation was barely better in other parts of Europe, where 53% of the respondents planned to reduce staff. Companies continued to invest in Germany and Europe, but new jobs were being created elsewhere.

Jobs are moving abroad

"Cars are increasingly being produced in the regions where they are eventually sold," says Frank Göller, Partner and Automotive Expert at Horváth, speaking to the German Press Agency. "That's not new, but it has intensified." This trend has not been changed by the poor experiences of the past years with supply chain disruptions, particularly in semiconductors. "This process is accelerating further. The result is that jobs are being built up almost everywhere in the world - except in Germany and Europe."

75% of the surveyed companies plan to build capacities in India, 60% in China, and the same number in Eastern Europe. The signs of growth were also evident in other parts of Asia and in North and South America.

"New factories are rarely being built in Germany," Göller notes. "When new factories are being built, they are usually outside of Germany. And that's where the employment build-up is taking place."

Excess capacities increase cost pressure

Nevertheless, a large portion of investments is still flowing to Germany. "If you look only at companies with headquarters in Germany, at least a quarter of the total investments of all globally operating companies still goes to Germany," says Göller. That is significantly more than in any other world region.

However, the money goes into new products and technologies and the conversion of existing sites to electric drives. "In production, there is a significant investment in the automation of production plants and digitalization." Correspondingly, the employment situation looks bleak.

"We don't see Germany being reduced to a pure development site," Göller emphasizes. "Many companies, even the large corporations, still identify as a German and European location and with their factories here."

However, many factories in Germany and Europe are already significantly underutilized today. Correspondingly, the cost pressure is high, and many manufacturers have reacted with cost-cutting programs and staff reductions.

The survey was conducted by the consulting firm Horváth in the last quarter, interviewing 91 industry executives, of whom 55 were from Germany. The selection was not representative but still significant, according to Göller. The respondents were mainly from automobile manufacturers, but also from suppliers, large dealers, and mobility providers.

Despite the high cost pressure and new competition, some companies in the German automobile industry are still planning to invest in Germany, according to a survey conducted by Horvaθ.
Frank Göller, Partner and Automotive Expert at Horvaθ, mentioned during an interview with the German Press Agency that cars are increasingly being produced in the regions where they are eventually sold, which has intensified in recent years.
According to the survey, 59% of the German companies questioned plan to reduce their workforce over the next five years, with 14% even planning significant reductions, while only 15% are planning to expand their workforce.
The survey also revealed that 75% of the companies plan to build capacities in India, 60% in China, and the same number in Eastern Europe, indicating that job creation is happening in these regions rather than in Germany and Europe.
Frank Göller noted that while a large portion of investments is still flowing to Germany, new factories are rarely being built in Germany, and most of the employment build-up is happening outside of Germany.
The German Press Agency reported that the survey was conducted by Horvaθ in the last quarter, interviewing 91 industry executives, including 55 from Germany, with the respondents mainly from automobile manufacturers, but also from suppliers, large dealers, and mobility providers.
As a result of the high cost pressure and underutilized factories in Germany, many manufacturers have responded with cost-cutting programs and staff reductions, as revealed by the survey conducted by the consulting firm Horvaθ.