Germany’s car industry is facing mounting pressure from weaker domestic demand, tougher Chinese competition and new US tariffs, raising the prospect of factory closures and significant job losses. The problems threaten a sector long regarded as a cornerstone of Germany’s economy, with workers protesting at major manufacturers and suppliers over the future of automotive employment.

European car sales fell from almost 18 million in 2019 to about 13 million in 2025, while US imports now face a 25% tariff. Volkswagen is considering closing four German factories and has written down $11.5 billion, including $6.9 billion linked to Porsche, whose slowing Chinese sales and weak electric-vehicle demand have reduced profitability. Mercedes-Benz has also warned it may close one German assembly plant and one powertrain plant, while VW says it will accelerate efforts to reduce costs and its workforce.