Germany’s powerful automotive sector is facing its biggest challenge in decades as Chinese carmakers rapidly expand across Europe, forcing industry leaders to warn that tens of thousands of jobs could be at risk without urgent action.
The German Association of the Automotive Industry (VDA) has warned that political decisions and worsening global competition are threatening the future of Europe’s industrial heartland, with manufacturers and suppliers struggling to adapt to a rapidly changing market.
VDA president Hildegard Müller said the warnings issued by Germany’s car industry had been acknowledged but that the necessary changes had “largely failed to materialise”.
She warned that the consequences were becoming increasingly severe, with pressure mounting on factories, investment and employment across the sector.
“Reality has overtaken political goals and approaches and is increasingly putting jobs at risk,” Ms Müller said.
The warning comes as Chinese manufacturers make rapid gains in the European automotive market, particularly in electric vehicles.
Companies including BYD, Geely, Chery, SAIC and Leapmotor have expanded their presence by offering competitively priced vehicles packed with technology, challenging established European brands.
Market data shows Chinese manufacturers are now securing meaningful shares of new car registrations across Europe, putting pressure on traditional giants such as Volkswagen, Mercedes-Benz and BMW.
The shift reflects a wider transformation in the global car industry, where China has developed a strong position in battery technology, electric vehicle production and supply chain efficiency.
European manufacturers, meanwhile, have faced higher production costs, slowing demand and the expensive transition away from petrol and diesel engines.
The crisis has intensified concerns surrounding Volkswagen, one of Germany’s largest industrial employers.
Reports have suggested the company could consider significant cost reductions, including potential factory changes and large-scale job cuts, as it attempts to compete with lower-cost rivals.
Volkswagen, which owns brands including Audi, Skoda, Seat and Cupra, employs more than 650,000 people globally.
The company has acknowledged that the traditional business model of developing vehicles in Germany, manufacturing them across Europe and selling globally is facing growing pressure.
Industry leaders argue that without reform, Europe risks losing manufacturing capacity to regions with lower costs and stronger support for electric vehicle industries.
Ms Müller called for urgent action from policymakers, arguing that Germany and Europe must create conditions that allow manufacturers to remain competitive.
“Given the intensifying international competition, there is no realistic alternative to a change of course in Berlin and Brussels,” she said.
She also suggested that some struggling manufacturing sites could potentially be opened to foreign investors as a way of protecting jobs and maintaining industrial activity.
The debate highlights a major strategic dilemma for Europe: how to defend domestic manufacturing while competing against a Chinese automotive industry that has rapidly scaled production and reduced costs.
For Germany, the stakes extend beyond cars. The automotive sector remains a cornerstone of the country’s economy, supporting hundreds of thousands of jobs and a vast network of suppliers.
As Chinese brands continue their advance, Europe’s traditional car giants face a race to reinvent themselves before the industrial advantage shifts permanently overseas.
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