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EY study confirms sharp profit decline at German automakers as IG Metall mobilises mass protests over job cuts

Executive summary: EY analysis published 20 September 2026 reports a significant drop in profits for German automakers (VW, Mercedes-Benz, BMW and peers) amid widespread job cuts. The profit erosion threatens capital allocation for EV and software investment, while mass layoffs trigger political and social friction in Germany's largest industrial sector.

Who is involved: Volkswagen, Mercedes-Benz, BMW, IG Metall union, German federal and state governments, EY as analyst.

Likely next: IG Metall protests on 21 September; Q3 earnings season in late October; potential government industry talks; EU CO2 fleet target review in 2025.

An EY study cited by Handelsblatt shows profits at German car manufacturers have fallen markedly, coinciding with the elimination of tens of thousands of jobs across the sector. The IG Metall union has called protests at more than 200 locations for Monday, signalling escalating labour unrest. The profit squeeze reflects structural margin pressure documented since mid-2024 and raises questions about the industry's capacity to fund the electric transition while absorbing fixed-cost reductions.

What's next — scenarios

Base: managed restructuring with state support (55%)

Automakers negotiate social plans with unions; federal/state aid packages bridge investment gap; margins stabilise near 5-6% by 2027.

Upside: policy-driven demand boost accelerates EV mix (20%)

EU relaxes 2025 CO2 fines; German purchase incentives return; OEMs hit 25% EV share in 2026, lifting pricing power.

Downside: uncontrolled cost cutting and plant closures (25%)

Profit slide deepens; VW and Mercedes announce German plant closures in 2027; IG Metall calls strikes; political crisis erupts.

What to watch

Timeline

Analysis — what this means

Likely next events

Sectors affected

Regulatory implications

Historical parallels

Key entities

Sources

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