Supply Chain Carnage Deepens European Auto Crisis

European automotive suppliers confronted mounting existential pressures as component manufacturers announced sweeping workforce reductions extending crisis rippling through vehicle production networks already operating at critical capacity thresholds.

Bosch, the world's largest automotive supplier, unveiled plans to eliminate approximately 5,500 positions across its automotive division over coming years, citing stagnating global vehicle sales and slower than anticipated transition to electric powertrains. Around 3,500 redundancies target development teams working on advanced driver assistance systems and centralised vehicle software, with approximately half concentrated at German sites. The company seeks to save roughly €2.5 billion annually through restructuring.

French supplier Valeo confirmed elimination of approximately 1,000 positions across European operations, including closure of two French production facilities. Over 800 redundancies will occur in France, with additional reductions affecting German, Polish, and Czech operations. The restructuring follows Valeo's October decision to reduce annual sales guidance for a second time in 2025, lowering projected revenues to

€21.3 billion from earlier €22 billion expectations.

Continental previously announced reduction of 7,150 automotive division positions, including 5,400 administration roles and 1,750 research and development positions, targeting €400 million annual cost savings. German supplier Schaeffler confirmed plans to eliminate 4,700 positions, predominantly at German locations, after operating profit nearly halved during third quarter.

The supplier distress compounds broader manufacturing overcapacity afflicting European automotive sector. AlixPartners consultancy estimates European factories currently operate at merely 55% capacity utilisation, gradually ceding market position to Chinese competitors. Analysts project potential closure of up to eight automotive plants across continent over coming years as manufacturers confront structural oversupply.

Industry observers note cascade effects through supply networks as major vehicle manufacturers—including Volkswagen, Stellantis, and Ford—simultaneously reduce European production volumes. Volkswagen announced unprecedented closure of three German facilities alongside 10% workforce pay reductions, whilst Stellantis repeatedly suspended assembly operations across multiple European locations citing inventory rebalancing requirements.