German auto body warns of fall in sales & more job cuts in 2020

Germany's Automobile industry association VDA issued a stark warning this week saying that it expects global car sales to fall by 5% - the largest drop since the financial crisis - and that more job cuts may come as a result in 2020.

Bernhard Mattes, president of industry association VDA, told reporters: “The competition is getting tougher, the headwinds are getting stronger,” adding that the association expected a 4.1 million fall in car sales to 80.1 million.

Germany's automotive industry is heavily dependent on exports. Between a general decline in foreign demand, ongoing long-term economic uncertainty connected with Brexit, and disputes over tariffs with the Trump White House, the sector is facing an unprecedented set of issues.

The sector, an important driver of overall growth in Europe’s largest economy, is also having trouble adjusting to stricter regulation following an emissions-cheating scandal and managing a broader shift away from combustion engines toward electric cars.

Mattes added that short-term employment contracts were not being renewed and the "instrument of short-time work is being employed once again". This means that permanent staff numbers at car factories is likely to decline.

While he gave no figures for the predicted layoffs, he said that the drop in employment seen this year would only worsen in 2020.

In 2018, the German car industry employed 834,000 people, its highest levels since 1991.

VDA has said it expects car sales in Germany to fall by 4% to 3.43 million in 2020 and to drop by 2% to 15.3 million in Europe. There is also an expected decline in sales in both China and the US.

Mattes called on Chancellor Angela Merkel's unstable coalition government to better organise itself in order to understand and get a grip on the structural changes happening in the car industry, including trends like autonomous driving and digitisation.

“Now it must be all about improving the framework conditions in Germany as an industrial business location,” Mattes said. “What we need right now, therefore, is a stable government capable of taking action.”

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