Mahle slashes jobs as EU car market shrinks and rules tighten

Mahle's CEO warns EU regulations may trigger deeper job cuts and plant closures

Mahle Sticks to Strict Crisis Strategy Amid Automotive Supplier Sector Pressures

Facing multiple challenges in the auto supply industry, Mahle is maintaining a rigorous crisis management approach. CEO Arnd Franz told Handelsblatt during the presentation of the company's slightly declining 2025 financial results that crisis mitigation remains the top priority—while also affirming that the supplier's current strategy is proving effective.

Franz stated that Mahle's focus on electrification, thermal management, and internal combustion engines is paying off. "Mahle is on the path to profitable growth," he said. Nevertheless, the situation remains tense. The company cited geopolitical uncertainties, high energy costs, sharp currency fluctuations, and shrinking or stagnant markets as key burdens. Intense competition, particularly from China, adds to the pressure.

Mahle Implements Cost-Cutting Measures

The austerity drive is most evident in workforce reductions. By the end of last year, Mahle employed 64,242 people worldwide—a decline of 3,466 from the previous year, marking a drop of over five percent.

Germany has also seen job cuts. In 2023 alone, the supplier eliminated 600 positions in the country. Back in 2018, Mahle had nearly 80,000 employees globally—meaning nearly one in five jobs has since disappeared. The push for consolidation continues, with the company now reducing indirect costs in administration and development, particularly in Europe and North America.

In Germany, Mahle is negotiating with employees over an additional savings program and a supplementary wage agreement. So far, layoffs for operational reasons have been ruled out until the end of the year. According to Franz, the final number of job cuts will also depend on workforce contributions.

European sites face especially high pressure. Franz noted that the European vehicle market shrank by a quarter between 2018 and 2024. Last year, Mahle closed six facilities in Europe and North America and initiated the shutdown of four more plants. Western Europe remains the company's most expensive manufacturing region globally. To counter this, Mahle is shifting its focus toward growth markets in Asia, particularly India and China.

Criticism of EU Combustion Engine Regulations

Franz sharply criticized EU regulations, arguing that the slightly relaxed 2035 combustion engine phase-out does little to help. He noted that Mahle has largely completed its consolidation efforts outside Europe.

"If the EU Commission's proposal for a European combustion engine ban remains in its current form, we risk further massive restructuring, job losses, and plant closures," Franz warned. With demand for combustion technology in Europe dwindling, producing for other markets would no longer be viable due to high costs and tariffs.

Additionally, Franz highlighted that industrial policies in China and the U.S. increasingly require auto suppliers to boost local production. While Mahle has recently sensed stronger support from Berlin in Brussels, he supports local content rules to protect Europe's automotive industry—but only on a temporary basis. At the same time, he urged European industry to accelerate its pace. In Asia, Mahle operates at "China speed," having developed and launched an oil management module for a leading electric vehicle manufacturer in just one year.