Job market experiencing increasing unease!
The German automotive industry, including major players like Volkswagen (VW), is currently grappling with a deep crisis. According to the EY Industry Barometer, revenues for the entire German industry have been shrinking for eight consecutive quarters, with the automotive sector specifically seeing a decline of 1.6 percent.
This downturn is causing significant challenges for the industry, including stagnating demand, rising import tariffs, sluggish digitization, high tax burdens, high labor costs, and slow approval procedures. The decline on important export markets is particularly concerning for VW, with exports to the USA falling by 10 percent and exports to China, VW's biggest single market, falling by 14 percent.
As a result, VW has recorded losses due to the crisis and, like many other companies in the industry, has been forced to implement austerity measures. One of VW's models has been discontinued, and job cuts have become inevitable due to massive profit losses, overcapacities, and weakening foreign markets. Tens of thousands of jobs have already been cut in the German automotive industry, and VW is not spared from these reductions.
The future of the discontinued VW model, as well as the jobs of many employees at VW's Wolfsburg plant, remains uncertain. The uncertainty extends to the wider industry, with the German government's Investment Acceleration Program offering some hope, but its effects are yet to be seen. Until then, the industry continues to grapple with the challenges of transitioning to electric mobility, a weakening export market, high commodity prices, and intensifying global competition.
The labor market is becoming increasingly challenging for young professionals in the automotive industry and mechanical engineering. The USA and China, key foreign buyers of Volkswagen cars, are causing major concern for the German automotive industry. It remains to be seen how the industry will navigate these challenges and emerge from the current crisis.
