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Can’t the global giants bear it anymore?

According to Xiaoxiang Morning News, recently, German auto parts giant ZF announced that it expects to gradually reduce its German workforce from the current 54,000 to 11,000-14,000 by the end of 2028. In addition, ZF plans to carry out necessary factory integration in Germany and adjust production capacity based on the expected continued weak market demand.

At the same time, due to fierce competition, cost pressure and weak demand for electric vehicles, one of the focuses of this adjustment is ZF's electric drive technology division.

ZF to cut more than 10,000 jobs

In fact, the news of ZF's layoffs was first announced in January this year. At that time, the official news was that ZF would lay off 12,000 employees in two batches by 2030. Now, the scale of layoffs has been officially finalized, which is 11,000 to 14,000 people, and it will be before the end of 2028, which is earlier than the original plan.

Currently, ZF has approximately 168,700 employees worldwide, including 54,000 in Germany.

At the same time, ZF plans to carry out necessary factory integration in Germany, some factories may be closed, and production capacity will also be adjusted. "As ZF has repeatedly pointed out, if it proves impossible to find long-term prospects for individual bases or to permanently improve competitiveness, then restructuring or closure is also an option," the company said in a statement.

According to China Securities Journal, ZF Group CEO Holger Klein said that although the decision was not easy, it was a key step to ensure the company remains competitive in an increasingly competitive market.

Klein further stated that electric vehicles are the future development direction of the global automotive parts industry, and ZF Group will increase its investment in this field and establish partnerships with other companies. At present, ZF Group has made significant progress in the research and development of electric drive systems, battery management systems and autonomous driving technologies. Its product line includes various motors, hybrid and pure electric transmission systems, providing automakers with a variety of options.

According to data, ZF Group was founded in 1915. As one of the world's largest automotive parts suppliers, it is well-known for the production of gearboxes, chassis systems and safety technologies. The group has about 169,000 employees worldwide, including about 54,000 employees in Germany, and has operations in more than 160 production bases in 31 countries around the world. Its turnover in 2023 reached 46.6 billion euros (about 370 billion yuan).

Excessive production capacity of electric drive assembly

One of the focuses of ZF's strategic adjustment this time is its electric drive technology division, which was established in January 2021. Its English name is Electrified Powertrain Technology Division. It is the result of the merger of the former passenger car transmission technology division and the electric drive technology division.

ZF pointed out that the passenger car powertrain market is highly competitive and faces great cost pressure. The profit margins of electric vehicles are still generally low, and the industry's shift to electric vehicles will also lead to a decrease in the number of transmissions used in traditional vehicles and hybrid vehicles. Coupled with the current weak demand for electric vehicles, this has led to overcapacity in the electric powertrain production line that the company has invested heavily in.

In Europe, especially in Germany where subsidies were canceled ahead of schedule, the performance of the electric vehicle market is not optimistic. In the first half of this year, the German passenger car market achieved a 5.4% growth, reaching 1.47 million vehicles, but among them, electric vehicle sales fell by 9% year-on-year to 273,700 vehicles, and the market share also fell from nearly 25% in the same period last year to 18.6%.

German auto parts industry sees "bankruptcy wave"

As the global automotive industry accelerates its transition to electrification, the market for traditional internal combustion engine vehicles has shrunk sharply, posing unprecedented challenges to traditional European parts suppliers such as ZF.

In fact, ZF Group's layoff plan is not an isolated case in the industry. Other traditional auto parts suppliers such as Freya Group, Continental AG, and Bosch have also announced layoff plans. Among them, Bosch plans to lay off 1,200 employees by 2026, including 950 in Germany.

According to data recently released by consulting firm Falkensteg, the German auto parts industry has even seen a "wave of bankruptcies." In the first half of 2024, about 20 German auto parts companies with annual turnover of more than 10 million euros filed for bankruptcy, an increase of 60% over the same period last year.

The global industrial chain has undergone a dramatic change

With the global wave of new energy vehicles approaching, the accelerated restructuring of the global automotive parts supply chain has begun to emerge.

In the new energy vehicle supply chain, upstream core component suppliers play a vital role, among which batteries, motors, and electronic controls (collectively referred to as "three electrics") are the core components of the new energy vehicle power system.

Chinese auto parts companies have continuously increased their R&D investment and strengthened the construction of R&D platforms. They have achieved technological breakthroughs in the three-electric fields through independent R&D, joint ventures and technology introduction. They have successfully integrated into the global new energy vehicle parts supply chain system and their share in the global market has increased rapidly.

Judging from the list of top 100 global automotive parts suppliers, the number of Chinese parts companies on the list is increasing. The data from 2020 to 2023 are 7, 8, 10 and 13 respectively. By 2024, this number has risen to 15, and CATL's ranking has risen to fourth place, behind Bosch, ZF and Magna.

According to China Securities Journal, industry insiders said that at present, the performance of domestic new energy vehicle parts companies is showing structural growth. On the one hand, auto parts companies with a relatively large proportion of overseas market business can to a certain extent make up for the price pressure losses from domestic OEMs; on the other hand, parts companies with a relatively large proportion of electrification and intelligent incremental business will also have better economies of scale.

In its latest research report, Guotai Junan Securities said that with the acceleration of electric transformation, the domestic supply chain is expected to take advantage of the trend.

Source: Xiaoxiang Morning News, China Securities Journal

SFC

Editor of this issue: Li Yutong

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