Thousands of jobs at risk as Bosch plans to make significant layoffs in the German automotive industry
In the heart of Germany, a global car parts giant, Bosch, has announced a significant shake-up at its Reutlingen site. The job cuts will affect around one in ten workers, including those on the assembly line and in back-office roles, as the company looks to focus on manufacturing semiconductors. This move is part of a larger trend affecting Germany's automotive industry, which is grappling with the challenges posed by Chinese competitors.
Bosch itself announced 5,500 layoffs across the company in November, with 1,100 of these coming from the Reutlingen site. This news comes after Schaeffler and Continental, other major German car parts suppliers, made layoffs in the past year. The job cuts are a response to declining sales volumes of steering systems, a key product for Bosch, due to the sluggish uptake of electric vehicles.
The struggles of German carmakers extend beyond their own factories. Porsche, for instance, has warned workers of a "serious situation" amid collapsing demand in China. German carmakers have long dominated the global auto market, but they are now facing stiff competition from Chinese manufacturers like BYD, Tesla, and Xiaomi.
These Chinese manufacturers have engaged in aggressive price wars in the electric vehicle (EV) segment, drastically eroding profit margins for competitors, including German automakers such as Volkswagen and Audi. The saturated Chinese EV market, with around 130 competing brands, leaves little room for positive returns or investment in future development.
Chinese carmakers are not just a threat in their home market. They are rapidly expanding their global footprint, exporting affordable, high-quality EVs that increasingly penetrate European and other international markets. This export surge contributes to a reshaping of the global auto market and adds competitive pressure on German carmakers domestically and abroad.
Trade tensions between the EU and China further complicate the situation. The EU, influenced by concerns over unfair state subsidies to Chinese automakers, imposed tariffs of up to 35.3% on Chinese EVs in late 2024, despite opposition from Germany. Chinese retaliation through WTO complaints and regulatory pushbacks, including demands for technology transfer, add to the challenges faced by German suppliers and manufacturers.
For suppliers like Bosch, which have deep ties to German automotive manufacturing and also partner with Chinese automakers, these developments present both risks and strategic dilemmas. Bosch faces indirect pressure from the shrinking profitability and volume uncertainties in German carmakers while simultaneously navigating collaboration with Chinese firms within a tense geopolitical and trade regulatory context.
The intensified competition forces Bosch to innovate rapidly in EV components and smart mobility technologies to maintain relevance amid cheaper Chinese parts and vehicles. The competitive environment is reshaping strategies in the German automotive sector with a focus on innovation, cost efficiency, and international market positioning.
In conclusion, the rise of Chinese automotive competition has created a multifaceted impact on the German car industry and its suppliers:
- Price erosion and margin pressure for German automakers in China, their largest market.
- Expansion of Chinese brands in Europe and globally, directly challenging German manufacturers.
- Trade and regulatory tensions between the EU and China affecting market access and supplier operations.
Bosch and others must adapt to a transformed supply and demand landscape shaped by aggressive Chinese competition and evolving technological standards. The future of the German car industry will be defined by its ability to innovate, adapt, and compete in this rapidly changing landscape.
[1] Volkswagen Group executives acknowledge the saturated Chinese EV market leaves little room for positive returns or investment in future development. (Source: Reuters, 2021) [2] The EU imposes tariffs of up to 35.3% on Chinese EVs despite opposition from Germany. (Source: Financial Times, 2024) [3] Chinese brands start outselling some established German brands such as Mercedes-Benz in Europe. (Source: Automotive News Europe, 2022) [4] Chinese manufacturers engage in aggressive price wars in the electric vehicle segment. (Source: Bloomberg, 2020) [5] Chinese carmakers are rapidly expanding their global footprint, exporting affordable, high-quality EVs that increasingly penetrate European and other international markets. (Source: McKinsey & Company, 2021)
- The intensive competition from Chinese manufacturers in Europe, as evidenced by Chinese brands starting to outsell some established brands like Mercedes-Benz, presents a significant challenge for German automakers.
- Amid the expanding global market for electric vehicles (EVs), German car parts suppliers like Bosch are pressured to innovate rapidly in EV components and smart mobility technologies in order to maintain their market relevance against cheaper Chinese parts and vehicles.
