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German car industry sheds 42,300 jobs in a year amid Chinese competition

Employment in Germany's car industry fell to its lowest level since 2005 in the first half of 2026, with 42,300 fewer people working in the sector than a year earlier, the country’s statistics office Destatis said. The 5.8 percent drop to 691,500 employees was the steepest decline of any major German industrial sector.The car industry in Germany and Europe has struggled with a slow and uneven shift to electric vehicles, and faces mounting competition from Chinese manufacturers offering cheaper EVs both at home and in export markets. Germany’s car industry association VDA warned last month of a potential collapse of employment in the sector in Europe unless society and workers accept that “bold decisions” are needed to address competition from China and other rivals. Just last month, Volkswagen confirmed plans to cut up to 100,000 jobs globally, BMW was reported to shed as many as 8,000 jobs in Germany, and luxury carmaker Porsche, a VW subsidiary, said it will cut around one in five jobs by 2035, with 9,000 positions to be axed in total.Despite the job losses, the car industry remains Germany's second-largest industrial employer after mechanical engineering, which employed 905,900 people at the end of the first half of 2026. Within the auto sector, both carmakers and parts suppliers cut jobs.Germany’s industry employment decline was not limited to cars. Employment fell across every major sector, with the chemical industry down 3.6 percent, electrical equipment manufacturing down 3.4 percent, and mechanical engineering down 2.7 percent. Across manufacturing as a whole, employment fell by 144,100, or 2.7 percent, to 5.29 million.German industry has been shedding jobs for years, as the sector struggles with relatively high energy prices, geopolitical tensions, and global competition. In 2025, the number of people employed by industry fell to a 10-year low, according to a report by the German Economic Institute (IW Köln). Industry's share of Germany’s overall labour market fell from 22 percent in 2014 to 19 percent ⁠last year, stoking fears about deindustrialisation, and prompting the government to introduce new energy price subsidies. It also doubled down on efforts to decrease the financial burden of decarbonisation in Germany and at EU level, for example by weakening Europe's emissions trading system ETS.

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