Factory closures, layoffs hit European auto sector

By Bahattin Gonultas

BERLIN (AA) - The automotive industry in Europe is grappling with widespread factory closures and mass layoffs, posing significant challenges to the sector, compounded by both technological and geopolitical issues. The EU’s automotive business is struggling against increasing competition and weak demand.

Breakthroughs from China and the United States in the automotive industry have attracted increasing attention in Europe, where the sector is facing heightened competition from Chinese manufacturers. The slow transition from traditional combustion engine vehicles to electric vehicles (EVs) has also hampered growth and innovation in the sector, alongside rising costs.

Many manufacturers of vehicles and automotive components have recently announced major restructuring plans, including factory closures and layoffs, as they aim to mitigate the impact of declining orders and rising costs. Efforts to transition to electric vehicles are also ongoing, but many companies are struggling to meet the growing demand.

Bosch, a major German engineering firm and key supplier in the European auto sector, announced that it would cut 5,500 jobs globally within its automotive division, alongside shorter shifts in its production facilities.

Schaeffler Group, a German auto and industrial supplier, revealed on Nov. 5 that it would lay off 4,700 employees across Europe, including 2,800 in Germany, in response to weak demand from automakers. The company also announced plans to close factories in Austria and the UK.

Volkswagen, the German automotive giant, is currently facing its largest cost and structural crisis in history. The company has proposed a 10% pay cut for workers to reduce costs and maintain its market share. This plan was met with protests, and discussions with the metalworkers' union, IG Metall, have not yet produced a solution. Volkswagen is also planning to shut down production facilities in Germany and its Audi factory in Brussels.

Feintool, a Swiss-based auto supplier, stated on Tuesday that it would close one of its production plants in Germany and lay off 200 workers. Production at the German facility will be shifted to its plant in Hungary.

Valeo, a French auto parts supplier, announced on Nov. 27 that it would lay off around 1,000 workers across Europe due to restructuring efforts and plans to close two factories in France.

Stellantis, the global automotive manufacturer, revealed on Nov. 26 that it would close a factory in the UK.

Stellantis CEO Carlos Tavares resigned on Dec. 1, and the company suspended operations at its main plant in Turin, Italy, citing low demand.

Ford Motor Company, on Nov. 20, said it would implement a restructuring plan aimed at improving its cost competitiveness and sustaining growth in Europe as the industry transitions to electric vehicles. The company also confirmed that it would lay off 4,000 workers across Europe.

Michelin, a French tire manufacturer, announced that it would close two factories in France by the beginning of 2026, affecting 1,254 workers.

The 106-year-old auto parts supplier Johann Vitz GmbH filed for bankruptcy and is undergoing restructuring.

Meanwhile, business sentiment among German auto manufacturers dropped sharply in November due to dwindling orders, according to the Munich-based think tank ifo Institute.

Orders have been in short supply, even as some manufacturers have seen a spike in demand since the pandemic, while the industry remains uncertain over the future impact of US policies under President Donald Trump.

*Writing by Emir Yildirim in Istanbul