Latest quarterly results reveal a deep crisis for all German automotive giants: the Chinese market is slipping away, tariffs and geopolitics pose threats, and large-scale layoff programs become the norm.
Germany's automotive industry, the backbone of Europe's largest economy, is facing one of its toughest phases in the last decade. According to a comprehensive report published by Tagesschau on July 30, 2026, all major manufacturers-BMW, Mercedes-Benz, Volkswagen, Audi, and Porsche-are reporting double-digit declines in profits and sales, primarily in the key Chinese market. In response, companies have launched a wave of layoffs and severe cost-cutting measures that will affect tens of thousands of workers.
The Munich-based group reported a net profit of just €1.2 billion in the second quarter of 2026, a 35 percent decline compared to the same period last year. Revenue fell from €34 billion to €31 billion, while the operating result of the automotive division plunged by more than 60 percent to €629 million. In fact, BMW earned more from financial services than from vehicle production in the past quarter. In the first half of the year, net profit stood at €2.9 billion (compared to €4.0 billion last year), and Tagesschau data shows a continuous downward trend.
The main culprit is China. BMW's car sales there fell by 20.4 percent in the first half of the year, and by a staggering 30.2 percent in the second quarter alone. While Europe and the U.S. saw growth, especially in electric models, Chinese customers are increasingly choosing competitive domestic electric cars. According to Autoblog, BMW plans to eliminate a total of 8,000 jobs by the end of 2027, and is already offering severance packages in Germany. Tagesschau emphasizes that the company had already saved €2.5 billion last year, but now must accelerate its restructuring.
At the group level, Mercedes-Benz posted an operating profit (EBIT) of €1.55 billion in the second quarter, a 21.5 percent increase, largely thanks to its van division and financial services. Revenue slightly declined by 3.3 percent to €32 billion. However, Tagesschau data reveals that in the Mercedes-Benz Cars segment, adjusted operating profit fell by about a quarter to €909 million, while sales dropped by nearly 8 percent to 417,765 vehicles.
A particularly heavy blow came from the impairment of its Chinese joint venture; without that adjustment, the division's operating result would have been only €49 million. CEO Ola Källenius has already launched the 'Next Level Performance' program, which includes eliminating more than 5,000 jobs. In June 2026, he also initiated a global productivity initiative, specifically targeting German plants, with the aim of boosting efficiency.
In the second quarter, net profit of Europe's largest automaker fell by about a third to €1.54 billion. For the first half of the year, profit stood at €3.1 billion, 30 percent less than last year. Sales in China decreased by more than a third to 424,300 vehicles, and exceptional items such as the end of production of the electric ID.4 in the U.S. further burdened results. According to Tagesschau, the group expects a possible 3 percent decline in revenue for the full year 2026.
Regarding jobs, the elimination of 50,000 positions in Germany is already planned by 2030 (35,000 of which at the VW brand), and 37,000 employees have already agreed to termination agreements. According to Tagesschau, the group does not rule out an additional 50,000 layoffs. Four of the group's plants have no sustainable perspective for the 2030s.
Porsche increased its net profit by nearly 50 percent to €1.07 billion in the first half of the year, but that jump comes from a low base in 2025, when exceptional costs (restructuring and e-strategy) amounted to €800 million. Revenue fell by 5 percent to €17.23 billion, and last year's sales of 279,400 vehicles were the lowest since 2020. Management will cut 9,000 of the total 42,000 jobs by 2035, and board members have waived base salary increases in 2027 and 2028.
Audi's situation is even more severe. Net profit in the second quarter fell by 21 percent to €563 million, and revenue in the first six months of €29.2 billion is the lowest since 2021. Chinese operations contributed only €73 million (nearly four times more last year). Audi plans to eliminate 7,500 jobs in Germany by the end of 2029 and discontinue the night shift in Neckarsulm, and aims for medium-term annual savings of €1 billion. The revenue forecast for 2026 has been lowered from €63-68 billion to €58-63 billion.
The common denominator for all manufacturers is the loss of the Chinese market, where domestic electric vehicle producers increasingly dominate. Tagesschau notes that the long-standing reliance on internal combustion engines is now taking its toll, while political frameworks in the EU and Germany have changed repeatedly. Additional pressure comes from U.S. tariffs and the fallout from the Middle East crisis. Although Croatian automotive parts suppliers are not directly mentioned in these reports, such a deep crisis in the German industry could indirectly affect orders and employment in the domestic supply chain.
