European
automotive suppliers are struggling to keep their heads above water. In 2024,
automotive industry suppliers reported that nearly 54,000 jobs were cut, as
reported by the European Association of Automotive Suppliers (CLEPA). After the
first half of 2025, the toll for the year reached 22,000 jobs, reflecting significant
turbulence in the industry.
But the
worst is yet to come, according to Ulrik Lorck, communications manager at CLEPA.
"It is expected that more supplier plants could shut down than recorded so
far," commented Lorck.
In 2025,
for the first time, the EU – historically a prominent components exporter –
faced an automotive trade deficit in new mobility components, CLEPA warned.
This remarkable event was caused largely by a surge in battery imports from
China, which have doubled in recent years. It is also part of a broader automotive industry
transformation.
For
context, just five years ago Europe exported €7 billion ($8.2 billion) more in
traditional car parts to China than it imported.
"Factory
closures and bankruptcies are no longer distant threats, but a growing reality
for Europe's automotive suppliers," Benjamin Krieger, CLEPA secretary
general, warned in a September statement.
“Components
suppliers have admitted that the market situation is tough. The already very
challenging economic environment and market conditions for Bosch Mobility have
recently become significantly more demanding,” Trix Boehne, a spokesperson for
Bosch, commented.
She
explained: "The ongoing transformation of the automotive industry presents
the entire sector with major challenges. The demanding transition to
sustainable mobility, competitive pressure, and price pressures in our markets
have intensified, while at the same time the global automotive market is
stagnating and even declining in Europe.”
In
addition, Boehne noted that the ramp-up of some future technologies, such as
electromobility and autonomous driving, is being significantly delayed, and leading markets are
increasingly shifting to other regions, both in terms of production volume and
the adoption of new technologies.
"Due
to the sharp decline in demand, we have significant overcapacity," Boehne
admitted.
A time
to adapt
“Despite
the hurdles, European suppliers still form a large, system-critical base,
generating roughly €250 billion ($293 billion) in value and about
three-quarters of a vehicle's content,” commented Sudip Saha, co-founder of
Future Market Insights, a marketing research firm.
“Volumes
are flat to slightly down, and Europe is growing more slowly than the global
market. Electrified vehicles are roughly one in five new sales, with pure BEVs
plateauing," Saha said.
The
profitability of European automotive components peaked in 2021 and 2022 and has
been on a steady downward trajectory since 2023. "OEM margins have fallen,
suppliers are squeezed by EV capex, and jobs are being cut in ICE-heavy regions,”
he added. “Business was good, now it is structurally tougher.”
Potential closures of some
automotive plants in Europe over the next several years could deal a heavy blow to the industry. "Closing
several assembly plants would remove significant local volume and hit the tied
supplier clusters hardest," Saha admitted. “Larger tier ones will
consolidate, and smaller mono-plant suppliers risk exit. Content will shift
from engines and exhaust to batteries, e-drives, power electronics, and
ADAS."
As Chinese
OEMs plan to open new assembly plants in
Europe over the next several years, a big question is whether European component
suppliers can adapt their businesses to meet their component requirements.
"Chinese
brands bring both lost share and new business as they localise sourcing under
tariff pressure, but with demanding commercial terms," Saha added. “The
aftermarket remains large and slowly growing, with more electronics,
diagnostics, and EV-specific service needs.”
Meeting the
new demands of Chinese OEMs will become a new battleground for European
component suppliers over the next several years.
"Chinese
OEMs such as BYD and others are localising production capacity in Europe to
mitigate tariffs and be closer to the market. When they produce here, they need
a qualified supply chain here," commented Stefano Capurro, executive
consultant with Plastic Consult, a Milan-based thinktank.
To some
extent, European automotive components suppliers can benefit from rising
European defense spending, which will also increase demand for automotive
components and spare parts. According to Capurro, this emerging niche
represents an outlet that those with the right technical capabilities and
organisational structure should consider and approach proactively: medium
volumes, better margins, stringent requirements on quality and traceability,
and lower exposure to direct low-cost import competition.
"The
old model centred on a few 'domestic' OEMs and on low value-added parts is in
structural decline, but at the same time new tables are being set – Chinese
OEMs producing in Europe, European defence, technical components for EVs and
electronic systems – where European moulders can still have a seat, provided
they change fast enough," Capurro added.
Logistics
providers must be ready
For the
logistics providers, the ongoing change will drive several positive
developments, commented Andrew Austin, chief quality officer at Priority
Freight.
In
particular, the company anticipates an increased need for agile, time-critical
logistics. As production networks become more interconnected and model cycles
shorten, suppliers will rely even more on rapid, reliable transport to protect
build schedules, Austin explained.
In
addition, the company expects growth in cross-border and multimodal movements. "New
production footprints often create longer, more complex routes – making fast,
flexible solutions essential to absorb disruption," Austin stated.
Finally,
the transition will result in a more resilient and innovative aftermarket. "The
parts and service sector remains robust, and as EV adoption grows, we expect
sustained demand for responsive logistics to support new component
categories," Austin said.
According
to Austin, the market overall will be shaped less by plant numbers and more by
the speed and certainty with which suppliers can move components through
increasingly sophisticated supply chains.
Despite the
challenges, the European after-sales market is poised for strong growth in the
coming years. Industry forecasts suggest that Europe's automotive aftermarket
could grow by around 35% by 2030, driven by an ageing vehicle fleet and the
need to service multiple powertrain types, commented David
D'Annunzio, global vice president
and automotive vertical lead at DP World.
"The
average age of vehicles on European roads has risen steadily and now stands at
more than 12 years, increasing the need for ongoing servicing and replacement
parts. At the same time, new-car prices have continued to rise in recent years,
prompting many consumers to keep their vehicles for longer," D'Annunzio
added.
DP World
expects the pace of technological change to remain one of the biggest forces
shaping the sector.
"European
OEMs and suppliers are accelerating efforts to modernise their product
portfolios, streamline cost structures and strengthen their competitive
position in a fast-moving global market," D'Annunzio noted. “As EV technology matures and supply chains
adjust, we can expect greater collaboration between manufacturers and logistics
partners to improve agility and reduce total cost.”
In
turbulent times such as these, effective and resilient logistics is becoming
more important than ever. "Our recent research report, ‘Without Logistics:
Automotive Edition’, shows that disruption costs the industry approximately $13
billion each year, but investment in resilient logistics can reduce that by
20%," D'Annunzio shared.
"As
OEMs balance investment across EV, hybrid and ICE technologies, the need for
stable, visible, and cost-effective logistics networks will increase,"
D'Annunzio concluded. “Collaboration between manufacturers and logistics
providers will become even more important as the industry adjusts to new
technologies, customer expectations, and competitive pressures.”
Political
will is the key
Automotive
components manufacturers and logistics providers all agree that the industry's
future remains highly uncertain and will largely depend on the direction European
policymakers choose.
For
instance, Bosch advocates taking concrete steps to protect the industry, based
on dialogue between political stakeholders and the automotive industry.
"The
existence of many European automotive suppliers is at stake. Given the intense
competitive pressure from new players in other parts of the world, challenging
economic conditions, and trade barriers, time is of the essence," Boehne
said.
“A swift
and fundamental revision of CO2 fleet regulations is particularly
critical for the success of our industry,” Boehne added, suggesting that
Germany and Europe should leverage their expertise in a technology-neutral
manner to reduce CO2 emissions.
"Specifically,
this means creating a realistic market perspective for plug-in hybrids (PHEVs),
range extenders (EREVs), and renewable fuels beyond 2035 to effectively combine
European value creation and climate protection," Boehne said.
Furthermore,
instruments such as 'local content' requirements for key components are crucial
for retaining European components suppliers' expertise in high-tech sectors – from
electric drives to semiconductor manufacturing – within Europe, Boehne stated. "This
is the only way we can ensure a level playing field for the European automotive
supply industry and successfully address the enormous challenges of our
time," she added.
The extent
to which new entrants, including Chinese OEMs and suppliers, influence the
European market will depend on a combination of regulatory, commercial, and
consumer factors, DP Worlds' D'Annunzio agreed. "Their impact will
ultimately be shaped by how the region approaches industrial competitiveness,
technology readiness, and market access in the years ahead," he said.
The
European automotive components industry is certainly braced for fundamental
changes in the coming years, though there are still too many unknown variables
to make any definitive forecasts about what they will look like.
