— By Heather Arnest Liesch — 

Job losses in Europe’s automotive industry slowed only minimally in 2025, according to auto supplier association Clepa (Brussels; www.clepa.eu). After 54,000 cuts in 2024, the sector saw another 50,000 being let go last year.

The number of new hires was at only 7,000 in the year, falling “dramatically short of compensating for the workforce reductions announced”, the association said.

The latest Clepa survey, conducted by McKinsey (New York, New York, USA; www.mckinsey.com) in November 2025, indicates that profit margins improved somewhat in 2025 compared with the year prior. “The share of suppliers reporting losses or only break-even results declined from 38% to 34%,” the survey said. “Unfortunately, this marginal shift does not signal a broad recovery, and the underlying financial pressures remain significant.”

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Clepa stressed that the problems the automotive industry is facing are not temporary. For 2026, 70% of suppliers expect profit margins to come in below 5%, with a third even projecting little to no gains. According to Clepa, 5% is the threshold to sustain investment in technology, skills, and production.

Emphasising that the EU has strengths as a manufacturing and investment location, Benjamin Krieger, secretary-general of the association, urges policymakers to bolster the sector by cutting electricity costs and red tape along with improving financing conditions. “In parallel, local content policies must ensure that critical know-how remains in Europe,” he added.

Some local content provisions are foreseen in the European Commission’s Automotive Package announced at the end of last year. Overall, the new package relaxes 2035 targets and expands permissible technologies.

Carbon neutrality has been lowered to a 90% requirement, though this is not a full exemption, as CO₂ emissions must be offset.

Additionally, plug-in hybrids (PHEV), range extenders, and internal combustion engine (ICE) vehicles are permitted beyond 2035, provided emissions are limited.

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While Clepa considers the package a “first positive step”, the association calls for more technology neutrality, which would largely entail the avoidance of bans.

The auto supplier organisation does not see its critical concerns resolved by the EU Commission’s latest package and is strongly critical of the remaining red tape. “The suggested measures are too complex, do not do enough to address the crisis of the automotive sector, and fail to safeguard European production and jobs against international competition,” it said.

International competition is a major concern for the sector. “Competition from Chinese suppliers has rapidly accelerated,” Clepa said, emphasising that in addition to general cost advantages, China’s automotive industry is supported by substantial subsidies and a strong domestic base.

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The EU association reports that 69% of the bloc’s suppliers face competition from imports from China, with three in four expecting this pressure point to increase.

Citing GlobalData’s (London; www.globaldata.com) full-year forecast in November, Clepa said the bloc’s electric vehicle production in 2025 was up 23% year-on-year. By end-2025, a quarter of cars made in Europe are expected to be PHEVs or battery-electric vehicles (BEVs).

EU demand for e-cars is strong. The most recent report by European automobile manufacturers’ association ACEA (Brussels; www.acea.auto) shows the share of electric vehicles in the EU, EFTA, and UK at 62.9% in November compared with the previous month. This number was at 59.2% at the start of 2025.

BEVs now hold a share of 23.5% in the region, showing strong growth year-on-year from a 16.7% in January 2025.

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But local output of these vehicles is below earlier projections, Clepa noted. EV production in the EU was at 3.3 mn in 2025, much lower than the 4.8 mn forecast in 2023.

This does not indicate a weakness in e-vehicle consumption, however. “Total EU vehicle output in 2025 is projected to be around 20% below 2019 levels – equivalent to a shortfall of approximately 3.1 mn units – pointing to a persistent structural gap in production,” according to Clepa. Output is seen remaining stable from 2026.