Alarm in the Auto Industry

Shocking announcement sends shockwaves through domestic suppliers

Symbolic image(Bild: EPA/DANIEL REINHARDT)

This announcement is setting off alarm bells all over Austria! The German auto industry expects an additional 125,000 jobs to be cut by 2035. This latest round of job cuts could have enormous consequences, especially for domestic suppliers...

The German automotive industry, once a cash cow for the economy, faces an unprecedented bloodletting. The German Association of the Automotive Industry (VDA) is sounding the alarm and has drastically revised its forecast for job cuts upward. The main reason is the profound structural shift toward electric mobility, which is hitting the numerous supplier companies particularly hard. VDA President Hildegard Müller painted a grim picture for the RedaktionsNetzwerk Deutschland (RND): “Unfortunately, based on current calculations, we must assume a loss of 225,000 jobs by 2035.”

Gloomy Forecasts for the Auto Industry
That is 35,000 more than previously estimated. Of this staggering number, 100,000 jobs have already been lost between 2019 and 2025. This means that another 125,000 jobs are at stake over the next ten years.

“Suppliers are particularly affected because the transition from internal combustion engines to electric mobility will result in significant job losses, especially within the supplier industry,” emphasized the VDA chief. The elimination of complex transmissions, exhaust systems, and engine components for internal combustion engines is creating deep gaps in the order books of many small and medium-sized enterprises. This is truly bad news for Austria.

More than 5,000 jobs have been lost in the domestic automotive industry since the beginning of 2024—a development closely linked to the crisis in Germany. This was recently demonstrated by a study conducted by economic analyst Günther Oswald on behalf of the eFuel Alliance Austria. As a major supplier country, Austria is particularly hard hit by the current shift. Restructuring, automation, and plant relocations are seen as major challenges. Recently, industry giants such as Magna Steyr, AVL List, and ZKW have been affected.

Conditions are getting worse
VDA President Müller identifies “a serious and ongoing location crisis” in Europe as the main cause of this dramatic development. Conditions are deteriorating rapidly. “High taxes and levies, expensive energy, high labor costs, excessive bureaucracy—the list of challenges goes on.”

To avert even greater job losses, the VDA is calling for an urgent shift in EU policy. The key lies in “technological openness.” Chief lobbyist Müller calls for further relaxation of the phase-out of internal combustion engines. She advocates for broader approval—beyond what is currently planned—of plug-in hybrids and internal combustion engines (using e-fuels) after 2035 to prevent “the worst.”

In this scenario, the job loss by 2035 would amount to only about 75,000 jobs. Flexibility on the path to climate neutrality could thus prevent the loss of around 150,000 jobs. Müller describes the competitive mood in the country as disastrous: “Unfortunately, I have to say: The mood is bad, the situation is even worse.” She accuses parts of the political establishment of denying reality. 

In December, the EU Commission proposed continuing to register new cars with internal combustion engines in the EU even after 2035—a departure from the originally negotiated phase-out of combustion engines. In the future, there are to be exceptions under which CO2 emissions would only need to be reduced by up to 90 percent compared to the base year of 2021. However, these concessions are not enough for the auto lobby...