Europe's automotive crisis has a domino effect on suppliers

The entire European automotive sector is not sleeping soundly. In Germany, the Volkswagen group is preparing to close three plants and could lay off almost 300,000 people. The gradual reduction in production will obviously have a major impact on suppliers.

Schaeffler, a multi-brand company that also produces various components for cars (for example, Audi's Multitronic system), announced today that it would be laying off 4,700 people in Europe. And it is not the only company linked to this sector that is preparing to reduce its production and its workforce.

As Automotive News Europe writes, Bosch has announced that it will not meet its financial targets this year, ZF Friedrichshafen is planning to cut up to 14,000 jobs by 2028, Continental is considering spinning off its automotive parts unit and Michelin is planning to lay off 1,200 people and close two plants in France by 2026.

Reorganisation and cuts

Schaeffler's main customer is the Volkswagen Group, which is known to be in dispute with German trade unions over a 10% pay cut. The supplier has announced that the redundancies are "a response to the difficult market environment, the increasing intensity of global competition and the ongoing transformation processes affecting the automotive supplier industry".

In the third quarter of the year, Schaeffler was also hit by falling sales in its industrial business, which makes components for wind turbines and industrial robots, which is why it is putting its industrial robotics site Melior Motion up for sale.

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On the other hand, Schaeffler increased sales of its e-mobility business in all regions thanks to the €3.6 billion acquisition of Vitesco Technologies, which specialises in components for hybrid vehicles and has a strong presence in the electric vehicle sector.

Thanks to the reorganisation plan, which will cost around €580 million, Schaeffler expects to save around €290 million ($315.4 million) a year by the end of 2029.

More industry volatility:

Germany wants to save its crisis-hit automotive industry

Renault chief agrees to meet Alpine's Viry F1 engine staff after protests

Northvolt lays off workers to avoid closure, but production increases

Volkswagen in crisis! Tough cost-cutting measures announced

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