Heavy industry in Germany - the EU's largest economy and Sweden's far most important trading partner - has serious problems. Not least the carmakers.
“German industry must adapt to the new market reality. Otherwise, it will perish,” Matthias Schmidt, an independent industry analyst based in Hamburg, told Bloomberg.
They can no longer sit back and rely on their expensive “Made in Germany” label, he adds.
Great need for change
Carmakers in Germany employ around 700,000 people ahead of the cuts now expected on a broad front.
"These are steps we didn't think were possible just five years ago," writes industry analyst Harald Hendrikse at major bank Citigroup in a comment on Volkswagen's planned cuts.
He adds that the planned measures show how difficult the situation is and how great the need for change is in European industry.
As early as March 2025, the Volkswagen Group - which also includes car brands such as Audi, Porsche and Seat - had the union on board with a cut of 50,000 employees.
However, the headwinds since then have been worse than feared - with comparatively high wage costs, negative effects of Trump tariffs and declining sales in China. On top of that, there are increased costs for input goods as well as energy and transportation as an effect of the Iran war.
Again stagnation in the forecast
BMW recently presented a sharply lowered profit forecast, citing problems in China and inflation concerns among Western car buyers.
Major subcontractors in the sector - such as Robert Bosch, Schaeffler and Aumovio - are also affected. They have already announced plant closures and layoffs to reduce costs.
The German central bank expects a return to German stagnation in the second quarter after the upward turn in the first quarter.
