Europe’s automotive suppliers enter 2025 in a deepening state of distress.

The EU’s vision for a swift transformation will fail, unless policy makers change course. Automotive suppliers, as intermediaries between political ambition and market demand, are absorbing the shock waves of a sector in transition. Bankruptcies and site closures now account for half of the job losses, while investments continue to drop.

With 62% of companies grappling with overcapacity and unsustainable fixed costs, the next wave of job losses is imminent. Profitability is for the sixth consecutive year below viable levels for most suppliers, crippling their ability to reinvest and adapt. The most immediate casualty is future readiness: investment forecasts through 2030 have been slashed by over €22 billion, compared to last year, jeopardising Europe’s capacity to deliver on its digital and green ambitions.

Suppliers are bearing the full brunt of cost pressures, while demand remains stubbornly below what’s needed to produce new technologies competitively at scale, eroding the sector’s ability to maintain investment and putting critical capacities and know-how at risk.

The impact extends beyond factories. Livelihoods and regional stability are affected, as Europe’s green transformation could slip away. Without a significant overhaul of regulatory and policy frameworks, Europe stands to lose a crucial pillar of its manufacturing ecosystem – along with the innovation, jobs, and technological leadership it provides.

Author: Andy Cormack