Germany’s automotive sector is facing a serious downturn, with investments and jobs increasingly relocating overseas, according to the German Association of the Automotive Industry (VDA). Survey results show that 72% of small- and medium-sized companies in the auto supply chain plan to reduce investments in Germany, either by moving them abroad, postponing, or canceling them altogether.

Job cuts are already underway, with almost two-thirds of surveyed companies reducing domestic employment last year and nearly half continuing to cut jobs this year. The shift is driven by competitive disadvantages, declining orders, and challenges in transitioning to electric vehicles and software-focused manufacturing. Major carmakers, including Volkswagen and Mercedes, along with suppliers like Bosch and ZF, have announced tens of thousands of layoffs.

VDA President Hildegard Mueller warned of political and social implications, highlighting risks to Germany’s prosperity and stability. She criticized EU regulatory measures aimed at supporting the shift to electric vehicles, calling for market-driven incentives rather than mandatory obligations to help maintain Germany’s competitiveness as a global automotive hub.

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