Job Guarantees in Exchange for Pay Cuts: One German Supplier's Survival Pact as Industry Slumps

Mahle workers accept pay cuts for job security to 2029, while Porsche, VW, Bosch, and BMW announce massive redundancies; 50,000 auto jobs lost in 2025 alone.

At Mahle, a major automotive supplier with roots in Stuttgart and Kornwestheim, workers have agreed to swallow reductions in salary, holiday pay, and Christmas bonuses. In return, they secured a no-compulsory-redundancy pledge lasting until the end of 2029. CEO Arnd Franz called the deal a victory for competitiveness. Yet even this rescue package cannot save every site: the plant in Neustadt an der Donau is still slated for closure.

The Mahle pact stands in sharp contrast to the storm raging across Germany’s automotive landscape. Porsche, the Stuttgart-based sportscar maker, is mulling up to 4,000 additional job cuts, focused on management and administration. At its Weissach development hub, the company is examining a capacity reduction of roughly 30 percent. The group has not confirmed the numbers, but says details of a future-oriented package will be finalised by the end of July. An earlier programme had already set in motion 1,900 job losses across the Stuttgart region by 2029.

Consultants at EY count nearly 50,000 jobs lost across the entire auto sector in 2025 alone. Volkswagen is weighing what insiders describe as a radical savings blueprint: up to 100,000 positions could disappear and four German factories might close. Bosch Mobility slipped into the red for the first time since the financial crisis. BMW has announced 4,000 to 5,000 job cuts. Frank Sell, the works council chief at Bosch, called on 5 July for a crisis taskforce bringing together employers, unions, and politicians. Meanwhile, around 33,000 demonstrators protested at Mercedes-Benz against plans to extend working hours without raising pay.

Supplier Continental is offloading its Contitech division to private equity firm Lone Star Funds for an enterprise value of four billion euros. The deal is expected to close by the end of 2026, pending regulatory approval. Contitech has already announced the elimination of 3,000 positions worldwide, 1,600 of them in Germany. The IGBCE union has threatened to resist if further cuts follow, though at German sites with roughly 7,700 employees, compulsory redundancies are ruled out until the end of 2030.

An even more explosive situation is unfolding at Zalando. The online fashion retailer intends to shut its logistics centre in Erfurt by the end of September, putting 2,100 jobs at risk. The works council is demanding a fair social plan. A decisive mediation hearing is scheduled for 9 July, and employees are accompanying the talks with protests.

Amid this wave of dismissals, legal pitfalls are drawing increased attention. In April, the Federal Labour Court clarified that a termination is invalid if the employer failed to file a mass-dismissal notification or to conduct a proper consultation procedure with the works council. Labour lawyers warn that mistakes in the social selection process are especially common: companies often construct age groups to target specific employee segments for redundancy. A proposed reform that would relax dismissal protection for high earners—those with monthly salaries around 15,000 euros—is judged by experts to have limited impact. Most cases, they note, end in a settlement with a severance payment anyway.