The European automotive industry is “in danger of death”. The warning was launched on March 5 by Stéphane Séjénéné, the vice-president of the European Commission, before the presentation of his plan to help the sector to overcome the shock of the green transition. Announcements of site closings and job cuts have multiplied for several months in the automotive sector, which employs 13 million people in the European Union and represents about 7 % of its GDP.
Latest: the manufacturer Audi (Volkswagen group), which announced on Monday, March 17, an abolition plan of 7,500 jobs by 2029 in Germany. This plan providing for 13.5 % of its workforce aims to “strengthen both the competitiveness and the future prospects of Audi”, said Gernot Döllner in a press release. The CEO of the German brand has evoked “economic conditions increasingly hardening, the pressure of competition and political uncertainties (which) pose enormous challenges to the company”. The high -end vehicle manufacturer employs 87,000 people, including 55,000 on its German sites.
Like a symbol, Audi, for its part, has closed its Brussels factory in Belgium in late February, which used some 3,000 people and manufactured the high-end electric SUV Q8 e-tron. In 2024, Audi delivered more than 164,000 “all -electric” models, a decline of 8 % over a year. The Chinese market, representing almost 40 % of its global deliveries, declined by 11 %. In the Volkswagen galaxy, of which Audi and Porsche are a part, the historic brand VW will cut in its workforce and support most of the 35,000 job cuts by 2030 already announced by the group at the end of 2024.
Mercedes-Benz’s annual net profit dives
Mercedes-Benz, for its part, revealed on February 20 a saving plan of several billion euros. The German manufacturer has announced plan to reduce its production costs by 10 % by 2027. The Stuttgart group intends to reduce production in its factories, by 2.5 million cars in 2024, to between 2 and 2.2 million by 2027. If this plan does not provide for factories in Germany, it however includes the relocation of German production in Hungary ” % lower than those in Germany, “said a statement. This plan could include job cuts, with voluntary departure and pre-retite programs, the company’s entourage, which employs 166,000 people around the world, told AFP, the majority of whom work in Germany.
In November 2024, the group had already declared that it wanted to reduce its costs by “several billion euros per year” in response to the difficulties of the global automotive market. Illustration of these difficulties: annual net profit plunged 28.4 % in 2024, to 10.41 billion euros, according to the results presented on February 20. The year 2024 was marked by a fall in group vehicle deliveries, 4 %, which had an impact on turnover, down 4.5 %.
The American-Franco-Italian group Stellantis tried to straighten the bar in 2024 by cutting up in its production and prices, for the first results expected at the end of 2025. But the Peugeot’s parent company, Fiat and Chrysler published a net profit on the year 2024, 5.5 billion euros on February 26 (-70 % over a year). After years of record profits, Stellantis crosses a difficult pass and drew 6 billion euros in its cash during the year 2024.
A market at half mast … and a strong competition with China
Decreased demand, loss of competitiveness, inflation, price pressure, more severe CO2 standards … The reasons for the weakening of car manufacturers are numerous. Sales in Europe remain far below the pre-Covid figures and some factories run empty. The price of vehicles and declining subsidies strengthen the wait -and -see attitude of motorists. In addition, the economic slowdown in China slowed down car purchases and strikes the German manufacturers, who made important profits there.
“The whole European automotive sector faces an unequal electric shift, an aggressive competition from Chinese manufacturers with adjusted cost structures and a low demand in the region”, underlined the Moody’s agency in a report published in late November 2024. Some manufacturers, such as Volkswagen or Stellantis, indeed confront the arrival of massively subsidized Chinese competitors. At the same time, these manufacturers consent enormous investments in the electrification of vehicles in order to respect the ban on petrol and diesel engines in the EU from 2035. Electric cars, still too expensive, saw their market share fall back to the EU for the first time in 2024, at 13.6 % over the year. Hybrid cars have taken control last year from a European automotive market in slow motion.
“We are in an emergency situation”
In addition, the threat of American surcharge brandished by Donald Trump arrives at the worst moment. At the end of February, the American president announced that European products would be “soon” of 25 % customs duties, without revealing a date. If these American customs duties on imports were established, they could give the European manufacturers a hard time such as Volvo, Volkswagen or Mercedes. Half of the vehicles sold by European manufacturers in the United States are imported, according to the Moody’s agency, for a total of 785,000 cars and $ 44 billion in 2024, according to the US administration. German car manufacturers could be particularly affected because they export to the United States most of their high-end models. In the United States, even the manufacturer of electric cars Tesla is concerned about this announcement while the business owner, Elon Musk, is very close to Donald Trump.
The crisis in the automotive sector affects German and French equipment manufacturers by turn. Almost 40 % of employees of the automotive supplier Dumarey Powerglide were dismissed on February 18, or 237 employees of the 580 that the Strasbourg factory has, said the CGT. “We are in an emergency situation. If we look back, we see that certain heavy industries have completely disappeared from Europe due to a lack of competitiveness,” warns Patrick Koller, managing director of the supplier forvia.
The year 2025 could prove to be dark for the European automobile, which is facing a “perfect storm”, according to analyst Patrick Hummel of UBS interviewed by AFP. However, some brands are doing better, such as Renault, European number three. The group, which has multiplied partnerships in order to lower its development costs, at the same time continues its sales strategy of higher rail vehicles. The French group reached a record for profitability in 2024. Its turnover increased by 7.4 % in 2024, to 56.2 billion euros. “We found the magic potion, as in Asterix and Obelix,” said Renault Luca de Meo’s boss.