European automotive players are facing stiff headwinds at the moment as vehicle sales slow, Chinese competition increases and the transition to e-mobility upends traditional strategies. Manufacturing costs, labour disputes and financial troubles at Volkswagen and Stellantis have dominated headline space over the past few months, but suppliers are taking a hit as well.
Hot on the heels of a Q3 plunge in EBIT—down 44.9% to €187m (US$204m)—German supplier Schaeffler has outlined plans to cut 4,700 jobs from Europe. Notably, Volkswagen is Schaeffler’s biggest customer and has also issued warnings of coming job cuts and potential plant closures. The bulk of Schaeffler’s cuts, around 2,800, will come from ten locations across Germany, with the Schweinfurt and Homburg sites the most affected. Five other locations elsewhere in Europe will see jobs go and two undisclosed locations will close entirely.
The moves will incur an estimated one-time cost of €580m but should produce savings of about €290m per year by the end of 2029. Schaeffler attributes the decision to “the challenging market environment, the increasing intensity of global competition, and ongoing transformation processes affecting the automotive supply industry.” The company has specifically flagged weak sales in Europe, resulting in overcapacity at European plants. Europe’s new car market has been up and down this year, dropping 18.3% in August and 6.1% in September, though the year-to-date figures are stable (+0.6%).
A degree of headcount trimming was anticipated following the merger with Vitesco, which was finalised on 1 October 2024, though these cuts were expected to be minimal and limited to administration. The merger increased the company’s headcount by around 35,000 to approximately 120,000 people. Pivotally, Vitesco also increases Schaeffler’s footprint within e-mobility. By 2030, the combined group expects 30% of its revenue to come from electric vehicle-related parts. Meanwhile, sales related to internal combustion engines are expected to drop from roughly half of the business to less than one-third.
The job cuts are just one part of a wider range of ‘structural measures’ outlined by Schaeffler on 5 November. “By taking the measures announced today we will tackle three issues,” commented Schaeffler Chief Executive Officer Klaus Rosenfeld. “Firstly, we will get our bearings and industrial business back on track. Secondly, we will realise cost synergies from the merger with Vitesco Technologies. And thirdly, we will continue the transformation of our Powertrain & Chassis and E-Mobility divisions. Given the current business environment, this programme is necessary to safeguard the Schaeffler Group’s competitiveness over the long term.”
Compatriot ZF took similar steps in July 2024, when it announced “a structural realignment for its German locations” designed to increase competitiveness and better respond to e-mobility requirements. At the time, ZF warned that up to 14,000 could disappear by 2028.
As for Schaeffler, its shares have been down by about 20% this year and fell around 4% following the publication of its Q3 results and restructuring programme.
