Europe’s auto parts industry is grappling with an unprecedented unemployment crisis. According to statistics from the European Association of Automotive Suppliers (Clepa), the industry has cut a total of 104,000 jobs between 2024 and 2025, equivalent to approximately 142 people losing their jobs every day. This scale far exceeds that of the 2020-2021 period, the worst hit by the COVID-19 pandemic, when only 5,370 layoffs were recorded.
Major industry players have successively joined the wave of layoffs: Bosch plans to cut 13,000 jobs by 2030, ZF’s cumulative layoffs will reach 14,000, Continental intends to eliminate more than 10,150 R&D positions and close its factory in Hesse, Germany, and Schaeffler will cut 4,700 jobs by 2029. To make matters worse, the industry only added 7,000 new jobs in 2025, which is far from enough to fill the huge job gap caused by over 50,000 layoffs. Executives from many enterprises have frankly stated that the industry’s operating conditions are unlikely to see a fundamental improvement in 2026, the number of closed factories may further increase, and the worst is yet to come.
Multiple Pressures: Declining Profitability, Intensified Competition, and Trade Reversal
The predicament of Europe’s auto parts industry stems from the interplay of multiple factors. In terms of profitability, after peaking in 2021-2022, the industry’s prosperity has been on a continuous downward trend. Automakers’ profit margins have declined, suppliers are squeezed by capital expenditures on electric vehicles, and jobs in regions dominated by fuel-powered vehicles are decreasing, highlighting the structural pressure on the industry.
High costs and industrial transfer have further exacerbated the predicament. Europe’s high energy and labor costs have forced enterprises to cut jobs to reduce costs and shift investments to regions with lower costs, resulting in a significant delay in the popularization of future technologies such as electric vehicles and autonomous driving. At the same time, the sharp decline in local market demand in Europe has led to serious overcapacity, forming a vicious cycle of “shrinking demand – idle production capacity – layoffs to cut costs.”
Competition from Chinese enterprises has added to the pressure on European suppliers. With the advantage of high quality and low price, Chinese auto parts have continuously expanded their share in the European auto market. In 2025, the EU recorded its first trade deficit in new auto parts, whereas five years ago, Europe’s exports of traditional auto parts to China exceeded imports by 7 billion euros.
To cope with the crisis, enterprises have actively adjusted their strategies. For example, ZF plans to purchase motors and inverters, which it has been producing by itself so far, from Chinese suppliers. Meanwhile, it intends to delay wage increases and reduce working hours, aiming to save more than 500 million euros by 2027. At the policy level, European policymakers are also formulating countermeasures. France has urged the EU to strengthen support for local production and proposed that the localization rate of electric vehicle parts sold in Europe should reach 75%. Relevant measures are expected to be announced by the end of January.
Amid the crisis, there are also opportunities. The localized production layout of Chinese automakers in Europe will provide supporting demand for European auto parts suppliers; the growth of Europe’s defense spending will also drive the demand for auto parts, opening up new markets for enterprises with technical capabilities. The old industry model is gradually declining, and adapting to the latest industry trend has become crucial for European auto parts manufacturers to seize new tracks. Rapid transformation is the key for them to gain a foothold in the evolving market landscape.
