Alarm in the Auto Industry

Shocking announcement sends shockwaves through domestic suppliers

VW and others are struggling with the transition to e-mobility and sluggish sales, so many current plants are operating below capacity.(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 risk 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 in the supplier industry,” emphasized the VDA chief. The elimination of complex transmissions, exhaust systems, and engine components—which were necessary for combustion engine models—is taking a heavy toll on the order books of many small and medium-sized enterprises. This is truly bad news for Austria.

 As a major supplier country, Austria is particularly hard hit by the current transformation. Restructuring, automation, and plant relocations are seen as major challenges.

We have 900 companies in the supplier sector, 150 of which are even primarily dependent on the automotive industry—especially the German one. They employ 76,000 people directly and over 200,000 indirectly. Since the beginning of 2024 alone, more than 5,000 jobs have already been lost, which is closely linked to the crisis in our neighboring country. Recent examples include the Lower Austrian lighting manufacturer ZKW, ZF Getriebe in Lebring, Styria (300 jobs), AVL List (another 350 jobs), and Wollsdorf Leder (bankruptcy affecting 350 people).

 New orders for Magna and Voest offer hope

However, there are also glimmers of hope. For instance, after cutting around 800 jobs, Magna Steyr recently secured significant orders from the Chinese electric vehicle manufacturers XPeng and GAC. They will have their cars for Europe assembled in Styria to avoid import duties into the EU. Voestalpine has become a major supplier of body panels for BYD’s new car plant in Hungary.

The End of the End for Combustion Engines

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

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 will be exceptions under which CO2 emissions must be reduced by only up to 90 percent compared to the base year of 2021. However, these concessions are not enough for the auto lobby...