Major automakers, including BMW, Mercedes-Benz, and Volkswagen, Germany's three largest automakers, all reported steep profit declines in the first half of 2025, citing U.S. tariffs as a major drag on earnings.

BERLIN, Aug. 26 (Xinhua) -- Germany's auto industry have cut more than 51,000 jobs over the past year as weak demand, U.S. tariffs and the costly shift to electric vehicles weighed heavily on the sector, according to a report by consultancy EY.

Employment in the auto sector fell by nearly 7 percent over the 12 months to June, making it the hardest-hit branch of German industry, according to the report, quoted by the German press agency (dpa) on Tuesday. Across the broader industrial sector, headcount dropped by about 114,000 to 5.42 million, down 2.1 percent year-on-year.

Actually, major automakers have reported significant profit declines. BMW, Mercedes-Benz and Volkswagen, Germany's three largest automakers, all reported steep profit declines in the first half of 2025, citing U.S. tariffs as a major drag on earnings.

Hildegard Mueller, president of the German Association of the Automotive Industry (VDA), said the tariffs still impose billions of euros in added costs each year, a heavy burden as carmakers navigate the transition toward electrification.

In 2024, Germany exported around 450,000 vehicles to the United States while German carmakers produced more than 840,000 vehicles at U.S. facilities, roughly half of which were exported globally, according to the VDA. This cross-border production model is particularly vulnerable to sudden policy changes.

Macroeconomic indicators also signal weaker export momentum. The Ifo Institute has reported that export expectations in Germany deteriorated in August, falling to minus 3.6 points from minus 0.3 points in July.

"Disillusionment is spreading in export business," said Klaus Wohlrabe, head of Surveys at Ifo. "Although a tariff rate of 15 percent from the U.S. is less than feared, it will nevertheless weaken export momentum."

EY's Jan Brorhilker said "Severe profit declines, overcapacity and weakening foreign markets are making substantial job cuts unavoidable, especially in Germany, where management, administration and R&D are concentrated."

Since early 2024, several automakers and suppliers, including Ford, Stellantis, Volkswagen, ZF and Bosch, have announced layoffs or plant closures in Germany and other European countries.

In addition, shrinking order books, along with rising energy and labor costs, are eroding the region's industrial competitiveness. According to the Ifo Institute, more than one-third of companies report a shortage of orders, with the auto, machinery, and electrical equipment sectors hit particularly hard.  ■