German car industry warns of job collapse unless ‘bold decisions’ made to address Chinese threat

 

German car industry warns of job collapse unless ‘bold decisions’ made to address Chinese threat

 

VW to propose 100,000 job losses to board and says car plants could be put under foreign ownership to save jobs

 

Lisa O’Carroll Senior correspondent

Wed 8 Jul 2026 12.45 BST

https://www.theguardian.com/business/2026/jul/08/german-car-industry-job-collapse-bold-decisions-address-chinese-threat

 

The German car industry has warned of a potential collapse of employment in the sector in Europe unless society and workers accept that “bold decisions” are needed to address competition from the Chinese and other rivals.

 

Volkswagen is preparing to formally propose up to 100,000 job losses, a move that has triggered a wave of protests.

 

The statement from the German Association of the Automotive Industry (VDA), which appears timed to coincide with this meeting, went as far as to say that handing some of the country’s car plants over to foreign ownership could be a way to save jobs.

 

“Reality has overtaken political goals and approaches, increasingly jeopardising jobs,” said Hildegard Müller, the president of the VDA. “The economic crisis is affecting the entire European industry; the consequences are visible and tangible every day – and they are becoming increasingly dramatic.

 

“We will not be able to keep all the factories and suppliers open this way. We should therefore open these locations to foreign manufacturers, for example. Every location we can keep here secures jobs.

 

“The options for action have become fewer, but all the more necessary. Germany and Europe are in a situation that demands bold decisions. This will also involve significant changes for people, the end of habits and entitlements that our country, regrettably, can no longer afford in some respects.

 

The automotive sector is the backbone of the German economy, with an estimated 3 million people directly and indirectly employed by household names including Volkswagen, Mercedes and BMW, and emblematic of the industrial health of economies across Europe.

 

A report published by Boston Consulting last month said that for decades Europe’s car industry had underpinned the continent’s “most powerful manufacturing networks” with “deep supplier systems, highly skilled labour and scale-driven efficiency” but that stability had been turned upside down.

 

It found that Europe’s production capacity now exceeded demand by “more than 5m vehicles a year”, or the equivalent of “35 production sites” across the continent.

 

In the last two years much of the car industry’s focus has been on Chinese overcapacity, but the VDA’s statement is drawing attention to deeper changes in Europe with fewer cars being bought by the public.

 

Volkswagen is trying to implement a comprehensive cost-cutting programme with up to 100,000 job losses, double the amount previously planned, by 2030 and the potential contraction or closure of several plants.

 

The previous plans were considered seismic, “an earthquake” for the car industry and the wider economy. The plans will be put to the VW supervisory board at the headquarters in Wolfsburg on Thursday with the trade union IG Metall calling for a day of action at all VW locations with events already announced at Emden, Zwickau, Hanover and Kassel.

 

According to Die Zeit, more events are planned at Porsche, Audi, and the truck and bus manufacturer MAN.

 

The VDA warned that political leaders needed to take on board that neither Berlin or Brussels could insulate factories from change in business models going into the future.

 

To remain blind to this would have profound “anti society” consequences, it said. “These decisions are difficult and must be developed in dialogue with all stakeholders. They will require a willingness to change from all of us,” it said.