Massive Job Cuts Shake European Automotive Sector Amidst Market Challenges

The European automotive industry is undergoing a severe employment crisis, with a staggering 50,000 jobs lost in the supplier sector during 2025, following 54,000 layoffs in 2024, according to data gathered by Clepa, the European association of automotive suppliers. This unprecedented wave of job reductions is attributed to sustained low demand compared to pre-pandemic levels and intensifying competition from Chinese manufacturers.

Benjamin Krieger, Secretary General of Clepa, described the current situation as without precedent, noting that the market for electric vehicles has struggled to gain momentum, forcing manufacturers to scale back production. The emergence of competitively priced, technically advanced vehicles from China, such as the BYD Dolphin priced at 390,000 kronor in Sweden, is increasingly challenging European producers' share.

Leading global suppliers are responding with significant workforce cuts; for instance, Bosch plans to eliminate 13,000 positions by 2030 as part of a 2.5 billion euro cost-saving strategy. Other major suppliers, including Valeo, Forvia, Schaeffler, and Continental, have also announced reductions. Arnd Franz, CEO of Mahle, expressed uncertainty about whether the sector has reached the bottom of the crisis or will face further layoffs in 2026. Valeo's CEO Christophe Périllat described the ongoing upheaval as a "Darwinian transformation."

In Sweden, Volvo Cars’ battery subsidiary, Novo Energy, announced the layoff of all 75 employees at its Torslanda plant. This decision follows Volvo Cars’ inability to find an external technology partner after the bankruptcy of Northvolt, which had been expected to be pivotal for the company’s battery technology development. The company released a statement confirming the layoffs and outlined the challenges arising from Northvolt’s financial collapse.

In response to these developments, the EU Commission is preparing proposals to be presented by the end of January aimed at leveling the competitive landscape between European and Chinese automotive manufacturers.

These extensive job losses reveal the depth of structural challenges facing the European automotive industry as it navigates market shifts and international competition. The sector awaits policy interventions, and companies brace for potential further adjustments in 2026.