Global giants can no longer withstand it.
According to the latest news, German automotive parts giant ZF Group recently announced that it expects to reduce up to 14000 jobs in Germany by the end of 2028, accounting for about a quarter of its total German workforce. The layoff plan aims to reduce costs, enhance competitiveness, and free up resources for the company's future development in the field of electrification.
As the global automotive industry accelerates its transition towards electrification, the traditional internal combustion engine vehicle market is rapidly shrinking, posing unprecedented challenges to European traditional component suppliers such as ZF Group. Several multinational component suppliers have announced layoffs worldwide. According to data recently released by consulting firm Falkensteg, the German automotive parts industry has even experienced a wave of bankruptcies.
The accelerated restructuring of the global automotive parts supply chain is now evident. Chinese new energy vehicle parts companies are leveraging their competitive advantages in manufacturing and cost to initiate a wave of overseas factory construction. Guotai Junan Securities stated in its latest research report that with the acceleration of electric transformation, the domestic supply chain is expected to take advantage of the situation, and domestic new energy vehicle parts suppliers are expected to enter the Stellantis global supply system, grow rapidly, and maintain the industry's "increase in holdings" rating.
Suddenly announcing a layoff plan
On July 30th, German automotive parts giant ZF announced that it expects to reduce up to 14000 jobs in Germany by the end of 2028, accounting for about a quarter of its total German workforce.
According to the official announcement of ZF Group, this layoff plan aims to reduce costs, enhance competitiveness, and free up resources for the company's future development in the field of electrification. The layoff plan will mainly affect the production and research and development departments, while the company will integrate its bases and streamline its management personnel.
CEO of ZF Group, Holger Klein, stated that although making this decision was not easy, it was a crucial step in ensuring the company's competitiveness in an increasingly competitive market.
Klein further stated that electric vehicles are the future direction of the global automotive parts industry, and ZF Group will increase its investment in this field and establish cooperative relationships 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 technology. Its product line includes various motors, hybrid and pure electric transmission systems, providing car manufacturers with multiple choices.
According to data, ZF Group was founded in 1915 and is one of the world's largest automotive component suppliers, renowned for producing transmissions, chassis systems, and safety technologies. The group has approximately 169000 employees worldwide, including around 54000 German employees. It has operations in over 160 production bases in 31 countries worldwide, with a revenue of 46.6 billion euros (approximately 370 billion yuan) in 2023.
As the global automotive industry accelerates its transition towards electrification, the traditional internal combustion engine vehicle market is rapidly shrinking, posing unprecedented challenges to European traditional component suppliers such as ZF.
In fact, the layoff plan of ZF Group is not an isolated case in the industry. Other traditional automotive parts suppliers such as Freya Group, Continental Group, and Bosch have also announced layoff plans. Among them, Bosch plans to lay off 1200 employees by 2026, of which 950 will be in Germany.
According to data recently released by consulting firm Falkensteg, the German automotive parts industry has even experienced a "bankruptcy wave". In the first half of 2024, about 20 German automotive parts companies with annual revenues exceeding 10 million euros filed for bankruptcy, an increase of 60% compared to the same period last year.
Faced with this dangerous situation, ZF Group is seeking an electrification transformation. In the first half of this year, ZF Group launched a strict cost cutting plan to reduce high debt and prepare for the transition to electric vehicles after 2026, with plans to invest billions of dollars in the transformation process.
Great changes in the global industrial chain pattern
The global wave of new energy vehicles is coming, and the accelerated restructuring of the global automotive parts supply chain has begun to emerge.
In the supply chain of new energy vehicles, upstream core component suppliers play a crucial role, among which batteries, motors, and electronic controls (referred to as "three electric") are the core components of the power system of new energy vehicles.
Chinese automotive parts companies are continuously increasing their R&D investment and strengthening the construction of R&D platforms. Through independent R&D, joint venture cooperation, and technology introduction, they have achieved technological breakthroughs in the three electric fields, successfully integrated into the global new energy vehicle parts supply chain system, and rapidly increased their market share in the global market.
From the list of the top 100 global automotive parts suppliers, the number of Chinese parts companies on the list is increasing. From 2020 to 2023, there were 7, 8, 10, and 13 companies respectively. By 2024, this number has risen to 15, and CATL's ranking has risen to fourth place, behind Bosch, ZF, and Magna.
At the same time, Chinese new energy vehicle parts companies are leveraging their competitive advantages in manufacturing and cost to initiate a wave of overseas factory construction. According to incomplete statistics, since the beginning of this year, several listed companies in the automotive parts industry, including Songyuan Co., Ltd., Hexing Co., Ltd., Kabei Yi, Derivative Technology, Rongtai Co., Ltd., and Zhongyuan Neipei, have announced their official investment in overseas production bases.
Industry insiders say that currently, the performance of domestic new energy vehicle parts companies is showing structural growth. On the one hand, automotive parts companies with a large proportion of overseas market business can to some extent compensate for the price reduction losses from domestic market OEMs; On the other hand, component companies with a large proportion of incremental business in electrification and intelligence will also have better economies of scale.
Guotai Junan Securities stated in its latest research report that the acceleration of electric transformation is expected to boost the domestic supply chain.
Guotai Junan Securities pointed out that domestic new energy vehicle component suppliers are expected to enter the Stellantis global supply system, grow rapidly, and maintain the industry's "increase in holdings" rating. Highly recommend Stellantis industry chain companies with excellent overseas capabilities in China.
Guotai Junan Securities believes that the merger of Stellantis has significant benefits and empowers globalization. According to the financial requirements of Stellantis DF30 plan, Stellantis' operating revenue will increase to 300 billion euros by 2030, doubling from 2021, and the adjusted operating profit margin will remain in double digits. Stellantis' sustained rapid growth in revenue and stable profitability are expected to provide new development opportunities for component suppliers within the system.
As part of the DF30 strategic plan, Stellantis will invest 30 billion euros in electrification and software development over the next decade. By 2030, the company will have over 75 pure electric vehicle models and achieve global sales of 5 million pure electric vehicles. Compared to other international car companies, Stellantis' new energy transformation is more resolute and aggressive, and is expected to form a first mover advantage in the global market.