Germany’s automotive sector, one of the nation’s largest and most influential industries, is facing its sharpest downturn in years, with more than 51,000 jobs cut in the first half of 2025.

An analysis by audit firm EY, using data from the Federal Statistical Office (Destatis), found that the industry reduced its workforce by nearly 7%, eliminating approximately 51,500 positions between January and June.

Across the broader German economy, around 114,000 jobs were lost during the same period, meaning nearly half of all layoffs came from the auto sector.

Since 2019, the year before the Covid-19 pandemic, employment in the industry has declined by more than 112,000 positions.

EY described the job losses as unparalleled compared with other sectors, reflecting the severity of the crisis.

Jens Brorhilker, managing partner for audit at EY Germany, said collapsing profits, weak demand, and structural overcapacity have forced carmakers into sweeping cuts.

He warned that restructuring across Germany’s industrial base will likely prolong job losses.

The EY study reported that automotive revenues fell 1.6% year-on-year in the second quarter of 2025, while Volkswagen announced a steep decline in quarterly profits and lowered its full-year outlook.

Yet the sector’s contraction remained less severe than the 2.1% fall in overall German industry sales, suggesting that, despite mounting difficulties, carmakers continue to perform slightly better than the wider economy.

Three major pressures are weighing heavily on Germany’s automotive sector.

First, Chinese competition, particularly in the electric vehicle market, has intensified as German manufacturers struggle with regulatory hurdles that slow innovation.

Second, trade policy under U.S. President Donald Trump has reshaped global dynamics.

While tariffs have placed new costs on German exports, Trump’s firm stance has secured a recent U.S.–EU trade agreement setting car import duties at 15%, lower than expected, though contingent on reciprocal tariff reductions by the EU.

Third, Germany’s weak economy—having contracted in both 2023 and 2024, with GDP declining again in the second quarter of 2025—has compounded domestic and global demand challenges.

Exports of German cars and auto parts to the United States dropped 8.6% in the first half of 2025, while demand in China has also slowed.

Analysts warn that with exports to both major markets under pressure, the industry’s restructuring and job reductions are likely to continue.

The crisis underscores how central the automotive industry remains to Germany’s economic fortunes, while also highlighting the deep challenges of adapting to global competition, trade realignments, and technological transformation.