Mass demonstrations erupted across Germany on Monday, with tens of thousands of workers taking to the streets to demand job security and the protection of domestic production facilities. The protests, numbering more than 280 events nationwide, were triggered by a profit warning issued by Volkswagen AG last Friday that underscored the deepening downturn gripping the country's automotive sector.
Participants in the rallies included not only Volkswagen employees but also workers from Mercedes-Benz Group AG, BMW AG, Audi, Porsche, and major auto parts suppliers. The powerful IG Metall union, while pressuring automakers to safeguard plants and jobs, also called on Chancellor Friedrich Merz's government to reduce energy costs and shield domestic industry from a surge of low-priced vehicle imports.
"This crisis was not caused by workers," Christiane Benner, president of IG Metall, told reporters at Volkswagen's sprawling Wolfsburg headquarters. Benner, who also serves on Volkswagen's supervisory board, proposed that the European Union expand tariffs on vehicles imported from China to protect the bloc's automakers.
Europe's largest carmaker slashed its operating margin forecast on Friday, lowering it to a maximum of 1% from a previous target of at least 4%. The company cited deteriorating market conditions in China, restructuring expenses, and a 6 billion euro (approximately 461.58 billion yuan at current exchange rates) asset impairment related to sports car maker Porsche AG. Volkswagen shares extended their decline on Monday, falling as much as 2.6% during the session, after plunging more than 5% on Friday. The stock has lost roughly 27% of its value so far this year.
The profit warning illustrates the convergence of multiple pressures hitting German manufacturing simultaneously. The Chinese market, which long delivered robust growth returns, has cooled significantly, while increasingly formidable Chinese automakers are expanding aggressively into Europe. German carmakers must also invest heavily in electrification, contend with trade barriers imposed by the United States, and find ways to shrink their costly domestic production footprint.
"The market is undergoing a profound and lasting transformation," Volkswagen Chief Financial Officer Arno Antlitz said after the profit warning. "We have no time to waste." The protests came just one day after Germany held two regional elections. Chancellor Merz's CDU party suffered significant defeats: in Berlin, it lost to the anti-capitalist Left Party, and in the northeastern state of Mecklenburg-Western Pomerania, the CDU lost its parliamentary seats for the first time since World War II. The far-right Alternative for Germany (AfD) also gained additional votes in the elections. The consecutive electoral setbacks have further complicated the government's ability to govern.
With manufacturers shedding jobs and even considering plant closures, the government is scrambling to restore Germany's industrial competitiveness. According to data from the German Association of the Automotive Industry (VDA), the country's storied automotive sector has cut approximately 100,000 jobs since 2019, with more layoffs expected. Volkswagen has announced plans that could ultimately affect roughly 100,000 positions globally, BMW intends to cut around 8,000 jobs, and Mercedes-Benz is shrinking its domestic production capacity while expanding low-cost manufacturing in Hungary.
The sector's downturn has rippled through the entire supply chain. VDA statistics show that auto parts suppliers eliminated 74,000 jobs between 2019 and 2025, representing nearly a quarter of the industry's workforce. Behind this contraction lies a broader challenge to Germany's traditional industrial model. For decades, the country's manufacturing prosperity relied on relatively inexpensive energy, open markets, and robust demand from China. The Russia-Ukraine conflict disrupted energy supplies, while China's domestic market growth has slowed and local automakers like BYD have introduced lower-priced vehicles that compete directly with several of Germany's best-selling models.
Volkswagen Group exemplifies the full weight of these pressures. Previously, ample profits from the Chinese market and its luxury brands supported a vast domestic manufacturing base and funded new technology research and development. Now, as China's car market contracts, Chinese automakers are flooding Europe with competitively priced electric and hybrid vehicles. In July, Chinese brands captured an 11% share of the entire European auto market. Conflicts in the Middle East have added yet another layer of strain, with German gasoline and diesel prices climbing to record highs this month.
Although electric vehicle sales are rising across Europe, profitability in the EV business tends to be weaker. Meanwhile, because brands like Porsche and Audi lack production bases in the United States, Donald Trump's tariff policies have made the American market increasingly difficult for German automakers to access. Adrien Brasey, an automotive analyst at Alphavalue, wrote in an email analysis: "Volkswagen's recovery depends entirely on the Porsche and Audi luxury brands, but they are constrained by US tariffs and, more critically, depend on stability in the Chinese market. Looking at the broader industry: due to severe domestic overcapacity, Chinese automakers will continue exporting at scale, sustaining downward pricing pressure globally."
The Merz government has introduced a 500 billion euro (approximately 3.85 trillion yuan at current exchange rates) infrastructure fund, accompanied by investment incentives and measures to lower electricity prices and taxes. However, many policies will take time to deliver results: corporate tax relief does not take effect until 2028, and companies are already cutting jobs and shifting investment abroad in the meantime.