Automotive News Europe — 2026-09-10
Automotive Industry
New electrification and software jobs cannot compensate for cuts to Europe’s automotive workforce fast enough as weak production and high costs force automakers and suppliers to reduce capacity.
European suppliers announced 104,000 job cuts in 2024 and 2025 — including 50,000 last year — while creating only 7,000 new positions in 2025, according to supplier association CLEPA, which represents a sector employing 1.7 million people in the EU.
The losses could deepen as a collision Chinese of competition, pricing pressure and regulatory challenges potentially threatens 350,000 supplier jobs by 2030, CLEPA said.
In June, Renault announced plans to cut 800 engineering jobs in France by the end of 2027 to compete with Chinese automakers, part of a broader 15 to 20 percent reduction in Renault’s global engineering workforce.
However, it is Germany, Europe’s largest auto producer, which is at the center of the contraction. The country’s auto workforce fell by 42,300, or 5.8 percent, in the year through June 2026 to 691,500, the lowest level since 2005, according to the Federal Statistical Office.
Employment at automakers declined 6.1 percent, while employment at parts and accessories suppliers fell 7.6 percent.
The figures are landing amid a new round of corporate reductions. Volkswagen Group’s supervisory board approved another 50,000 job cuts on Sept. 3 after previously agreeing to eliminate 50,000 positions. The automaker said it has 500,000 units of excess capacity at its factories in Germany.
Porsche’s supervisory board in July approved CEO Michael Leiters’ plan to cut an additional 5,000 jobs in Germany, bringing total planned workforce reductions to 8,900. The cuts, on top of 3,900 positions already announced, will be achieved through attrition, early retirement and voluntary severance while extending employment guarantees at German sites through 2035. Porsche employs about 23,000 people in Germany.
Meanwhile, BMW plans to remove as many as 8,000 jobs in Germany by the end of 2027 through voluntary severance.
Last year, Volvo announced it would cut 3,000 jobs — roughly 15 percent of the total office-based workforce globally — while Jaguar Land Rover plans to cut 4,000 jobs, or 9 percent of its workforce, amid U.S. tariffs and falling revenue. Most of those are in the U.K.
Supplier cuts outpace hiring
The speed of the decline has overtaken earlier forecasts, Benjamin Krieger, secretary general of CLEPA, told Automotive News Europe.
He said the group’s previous models already anticipated substantial employment losses from electrification, but adds the cuts announced since 2024 put the industry well ahead of that projected trajectory.
“The direction of travel is the same everywhere,” Krieger said. “Employment is on a steep downward trajectory.”
The contraction is occurring while suppliers struggle to recruit engineers and software specialists. Those shortages constrain development of the electric, digital and software-defined technologies that could support future employment, but filling them will not reverse the broader decline in labor-intensive manufacturing, he said.
“Qualified employees, in particular in engineering and software, are indeed in short supply,” Krieger said.
CLEPA estimates that EU vehicle output in 2025 remained about 20 percent below 2019, a gap of roughly 3.1 million vehicles. With production expected to stay broadly flat from 2026, suppliers face pressure to close plants, move work or cut payrolls to match the smaller market.
Germany’s costs no longer match productivity
Manuel Kallweit, head of economic intelligence and economics at German auto association VDA, told Automotive News Europe that the employment situation is “alarming.”
He said German plants are producing roughly as many vehicles as a year ago with about 6 percent fewer employees after production dropped below 2019 levels.
“Germany has always been a high-cost country,” Kallweit said. “While other countries have improved productivity, Germany faces rising costs, especially for energy. At the same time, businesses are still waiting for reforms such as lower taxes and social security contributions. In the past, those costs could be justified by productivity. Currently, that relationship is no longer right.”
He also argued that the EU’s CO2 rules should give automakers more flexibility on powertrains because factories that make combustion-related components cannot immediately switch to batteries.
“If a policy removes plug-in hybrids from the market, that policy is also removing the jobs in that area from the market,” Kallweit said. “Where you manufacture parts for plug-in hybrids today, you cannot simply build a battery factory tomorrow. Europe needs to be open to all technologies. That is important for the climate and for employment as well. In Germany alone, this could save 50,000 jobs.”
The VDA expects Germany to lose an additional 125,000 automotive jobs by 2035 under the current regulatory framework. Combined with about 100,000 jobs eliminated since 2019, that would leave employment 225,000 lower than it was before the pandemic.
New investment may move outside Europe
The wider EU auto ecosystem supports more than 13 million jobs, but new positions in batteries, software, charging infrastructure and other emerging fields will not necessarily appear where traditional jobs disappear, Sigrid de Vries, director general of the industry association ACEA, said in a written response to questions from Automotive News Europe.
“New jobs do not automatically compensate for jobs that may be lost as technologies and production processes change,” de Vries said.
The automotive value chain has invested an estimated €250 billion ($290 million) in electrification and related technologies since 2015, while EU-based automakers and suppliers invested nearly €450 billion ($522 billion) in R&D between 2019 and 2024, according to ACEA.
De Vries said Europe should reduce energy costs, regulatory complexity and permitting delays while expanding charging infrastructure and strengthening battery and critical raw material supply chains. Training must also help workers move from traditional manufacturing into digital and electrified vehicle roles.
Yet investment will determine whether those new roles remain in the region. Europe’s cost disadvantages already give companies an incentive to place production and development closer to faster-growing markets.
“If manufacturing in Europe becomes structurally less competitive than elsewhere, there is a risk that future investment and production capacity, and therefore the jobs associated with them, will increasingly be located outside Europe,” de Vries said.