German Auto Industry Faces 'Job Collapse' as Chinese Threat Looms: Bold Decisions Needed

The German car industry has warned of a potential collapse of employment in the sector unless society and workers accept that bold decisions are needed to address competition from China and other rivals. Volkswagen is preparing to formally propose up to 100,000 job losses, triggering a wave of protests.

The German Association of the Automotive Industry (VDA) has gone as far as suggesting that handing some car plants over to foreign ownership could be a way to save jobs. "Reality has overtaken political goals and approaches, increasingly jeopardising jobs," said Hildegard Müller, VDA president. "We will not be able to keep all the factories and suppliers open this way. We should therefore open these locations to foreign manufacturers."

A report by Boston Consulting found that Europe's production capacity now exceeds demand by more than 5 million vehicles a year, equivalent to 35 production sites. The automotive sector is the backbone of the German economy, employing an estimated 3 million people directly and indirectly.

Volkswagen is implementing a comprehensive cost-cutting programme with up to 100,000 job losses by 2030 and potential closure of several plants. The previous plans were considered "an earthquake" for the industry. Trade union IG Metall has called for a day of action at all VW locations.

The VDA warned that political leaders cannot insulate factories from change. "These decisions are difficult and will require a willingness to change from all of us," it said.