The VDA warned that Germany’s flagship auto sector is shedding jobs at an alarming pace. Since 2019, manufacturers have lost 100,000 positions, and a further 125,000 roles—roughly one in six current jobs—are slated to vanish by 2035. Policymakers label the industry “the most important industrial sector,” yet regulatory pressure is eroding its labor base for the German economy overall today.

EU climate policy drives much of the turmoil. A 2019 directive set a 2035 ban on new gasoline and diesel cars, a move the VDA says threatens 50,000 German auto jobs alone. Berlin responded with a softened proposal in December, extending the sales window for conventional engines, but the amendment still faces a lengthy EU legislative process before final approval.

The fallout reverberates beyond factories. Suppliers, parts makers and regional economies risk cascading cutbacks, while investors reassess exposure to a market forced to pivot before consumer demand fully materialises. With Brussels unlikely to abandon its electrification agenda, German manufacturers must balance compliance costs against shrinking domestic employment, a dilemma that reshapes Europe’s industrial outlook for years to come and investors.