ZF attributed the job cuts to the ongoing transformation in the mobility sector, particularly the shift towards electromobility. This restructuring aims to help the company adapt to tougher market conditions and maintain competitiveness internationally. The decision was described as "difficult but necessary" by ZF chief executive Holger Klein.
"The seriousness of the situation calls for decisive action to be able to adapt the company to the tougher market and competitive environment," Klein said.
"Restructuring the auto supplier in Germany was needed to strengthen our competitiveness and consolidate our position as one of the world's leading suppliers," Klein added.
The restructuring will primarily affect ZF's electric motors division, influenced by strong competition, cost pressures, and weak demand for electric vehicles. The market, particularly dominated by Chinese manufacturers, has proven to be highly competitive.
Building electric motors has resulted in "low margins" and difficulties in funding purely electric drives from profits in conventional and hybrid vehicles, ZF stated.
The company also highlighted that the shift to electric vehicles has reduced demand for conventional and hybrid vehicle transmissions, an area where German suppliers traditionally excel. The current low demand for purely electric vehicles has left ZF with overcapacity in high-investment areas.
Despite these challenges, Klein emphasized the company's commitment to electromobility.
"The future belongs to electromobility," CEO Klein said.
ZF will continue to invest heavily in this sector but will seek cooperation with other companies to stay competitive. As part of its restructuring, ZF plans to boost investments in areas like in-car technology, vehicle chassis, industrial technology, and aftermarket services.
The company’s network in Germany will be streamlined following recent acquisitions that led to gradual expansion. The final extent of the job cuts will depend on market developments, ZF said.
EU plans to ban the sale of new fossil fuel-powered cars by 2035 further contribute to job redundancies in the industry. Simultaneously, Chinese manufacturers are gaining a larger market share in electric vehicles.
Chinese battery-maker CATL has quickly risen to become the world’s third-largest auto supplier, intensifying competition. This shift, combined with the phasing out of combustion engines, has put European suppliers under significant pressure.
Besides ZF, other parts manufacturers like Bosch, Continental, and Webasto have also announced job cuts in response to these changes.
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