German Auto Industry Faces More Layoffs and Plant Closures, Lobby Chief Warns

Hildegard Müller, president of Germany’s VDA automotive lobby, has warned that European car manufacturers may face additional job cuts and factory closures. In a statement on Wednesday, Müller cited high energy and labor costs, along with bureaucratic obstacles, as key factors weakening the industry's competitiveness against global rivals.

The warning comes as major automakers like Volkswagen AG and Stellantis NV grapple with these economic pressures. Volkswagen, Europe's largest carmaker, is reportedly set to discuss plans that could include doubling its job cuts in Germany and closing factories. "The situation in the whole automotive industry is like the discussion in VW," Müller said in an interview, adding, "Not every production location can be there also in the future, so there must be programs for restructuring."

A significant challenge for the European auto sector is the growing presence of Chinese carmakers, which are expanding their footprint in the region. This, combined with the elevated costs of producing electric vehicles in Europe, has intensified the need for reform. Chinese companies, including Zhejiang Leapmotor Technology and Chery Automobile, have already started to increase their production capacity within Europe.

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In response to these challenges, Müller suggested that manufacturers could consider allowing foreign competitors access to their factories as a strategy to help preserve jobs. Concurrently, the European Union is working on a "Made in Europe" proposal within its Industrial Accelerator Act, aimed at rewarding manufacturers that produce vehicles locally. "Options for changes have dwindled, but they’ve become even more urgent," Müller stated.