Sentiment among German automotive component suppliers is deteriorating amid reduced investment and hiring
German automotive component suppliers are becoming increasingly pessimistic about the industry's prospects as the difficult transition to electric vehicles is combined with high costs, bureaucracy, trade barriers, and geopolitical pressures.
A VDA survey conducted in May among 116 suppliers showed that almost a third of them expect business conditions to worsen over the next year, while only 25% hope for an improvement, which is the opposite of the more optimistic balance seen in January. The results also point to a further decline in Germany's attractiveness as an industrial base: about two-thirds of suppliers said that planned investments in Germany would be postponed, moved abroad, or canceled, with Asia becoming the main beneficiary, followed by other EU countries and North America. Equally worrying are employment trends: more than half of companies are cutting jobs in Germany, while only 3% are hiring new workers, which is the lowest rate since the VDA began collecting comparable data in June 2024. Among companies that are cutting staff in Germany, 44% are hiring workers abroad, which highlights the trend towards shifting production.
current automotive news in our Telegram channel"The results of our survey highlight the crisis in Germany as an industrial destination," said Hildegard Mueller, President of the VDA. The conflict in the Middle East is adding to the pressure: 46% of suppliers are already reporting rising fuel, energy, and component costs.