Europe’s car industry is currently in freefall. As the Paris Motor Show gets underway, industriAll Europe is calling on carmakers to stop the job cuts and invest in our common future. The ongoing battle at Volkswagen, with potentially 50,000 German jobs on the line, is just the tip of the iceberg. BMW and Porsche also announced thousands of cuts this summer. Stellantis, which lost €22 billion in 2025, is slashing jobs in multiple locations, while Renault and Volvo Cars are exploring various under-the-radar strategies – voluntary departure plans and hiring freezes – to cut headcount.

Chinese competition is growing, but cutting jobs is not the answer

Car manufacturers and policymakers all seem to agree on the cause of this unravelling: Chinese competition. At this year’s Paris Motor Show, which opened on 12 October, more than a dozen Chinese brands will be on the floor at Porte de Versailles. Abroad, European carmakers have lost a huge share of the domestic Chinese market. And at home, Chinese brands made up 11.7% of the European market in August, up from 7.1% a year earlier. Chinese brands have more than doubled their sales in Europe. In a single year. And their latest surge is in plug-in hybrids, which escape the EU’s current tariffs on Chinese electric cars, demonstrating how policymakers continue to play catch-up.

Because the car is the industry of industries, every job lost on an assembly line also pulls down steel, chemicals, machine tools and thousands of suppliers with it. Suppliers are being hit hardest: our union affiliates have reported carmakers ending domestic supply contracts to import the same components directly from China. However the impact is measured, the decline of the automotive sector is catastrophic for Europe.

Carmakers say the answer is reducing capacity, removing burdensome rules, providing flexibility on CO2 regulations and finding new export markets to replace the shares lost in China. Their solutions are based on an argument that they can no longer afford Europe’s workers, pointing to third countries – often places with weak health and safety standards and no collective bargaining – where workers cost far less. Even setting aside the myths behind this argument – which you can read more about here – these companies’ own finances tell a different story about where there is ‘bloat’.

Record profits, shareholder payouts and missed investment opportunities

Between 2012 and 2025, Europe’s seven major carmakers made €469 billion in net profit. They handed €189 billion of it to shareholders in dividends and share buybacks. At the end of last year, they held €177 billion in cash and short-term investments. Volkswagen paid its shareholders €31.8 billion over the last five years before announcing its job cuts this year. Stellantis spent more than €16 billion on dividends and buybacks between 2023 and 2025, while its Italian workforce shrank by nearly 10,000. The examples go on and on.

That money could have gone into new plants, affordable electric models, joint-venture battery projects and in-house software development. Instead, shareholders were rewarded and workers are now handed the bill. Granted, these are multinational companies with complex global supply chains and we recognise that new investment in any country requires serious planning – but we focused on European-headquartered carmakers for a reason. Surely the places where these companies were founded – where loyal employees contributed to new production processes, where new breakthrough technologies were discovered and patented, where local and regional governments stepped in with favourable public finance and amenable permitting rules – deserve a greater share of the rewards generated through all of this advancement?

Public money must come with binding conditions

Too often, the opposite happens, especially with public money in the automotive sector. Our research found at least €4.9 billion in EU state aid to these same companies over the past decade. Not one of the awards we examined required the recipient to keep jobs, keep a site open or limit shareholder payouts. None came with a clawback mechanism. And this number is a floor: many countries have their own reporting systems that do not feed into the EU state-aid totals.

Companies are playing by the rules they have been given. It is the job of government to change these rules, to shape markets around a public purpose and distribute the gains and losses of industrial transformation more equitably – and they desperately need to do a better job. This is why the upcoming Industrial Accelerator Act matters so much, and why its passage should not be delayed further. For the first time, Europe proposes to tie public support for cars, from public procurement to incentives for company fleets, to production in Europe: at least 70% of the value of a vehicle’s components, excluding the battery, made in the EU, with battery components phased in. It is the most important industrial policy tool the sector has been offered in a generation and adds real coherence to an often-contradictory list of regulatory tweaks, subsidy regimes and, sadly, empty promises that have been offered over the last few years.

Watering down ‘Made in Europe’ will undermine Europe’s industrial future

Yet major carmakers such as Volkswagen, Stellantis and Renault are now asking for the share of a fleet that must qualify as ‘Made in Europe’ before the whole fleet benefits to be cut from 85% to 70%, and for R&D and engineering, which can be more easily manipulated and inflated, to count towards European content. On top of this, ACEA, the European carmakers’ association, is calling the battery requirements unrealistic. If these changes occur, the ‘Made in Europe’ label would be just that – a label with nothing inside. A car assembled in Europe from imported parts does little to retain value added in Europe or create the incentives to locate the entire value chain in Europe, let alone build and scale the industrial clusters that we know have been crucial to the success of our Chinese competitors. That is why industriAll Europe is calling for an 80% European-content threshold wherever vehicles benefit from public support, covering the whole value chain from raw materials and batteries to power electronics, software and final assembly.

The same pattern is playing out on climate rules. Having already won more time to meet their 2025 targets, carmakers now have a Commission proposal to lower the 2035 target from a 100% to a 90% cut in CO2 emissions and more flexibility after 2030. Every delay tells investors that Europe’s electric future is negotiable. It will not slow down Chinese competitors, who are already winning on hybrids, or American brands like Tesla. It will only slow down the investment Europe needs to compete with them.

Europe has the skills and capacity – now it needs the investment

Chinese carmakers did not win market share just because Europe’s rules are too strict or our workers are lazy. They won it because they invested – supported by overly generous but strategically directed public support – accepted lower profit margins for shareholders and built the affordable cars people want to buy. European carmakers made the opposite choice.

Europe can still change course, but management needs to buckle up. Europe has the plants, the engineers and the skilled workforce to build the cars of the future. What it has lacked is companies willing to invest in them. This is why we are demanding this autumn that European policymakers pass an Industrial Accelerator Act with binding conditions: guaranteed jobs, collective bargaining, training, protection against relocation, no subsidies for dividends or buybacks, and clawbacks when commitments are broken – and not only when foreign companies invest in Europe, but wherever public support is involved. European demand, from corporate fleets and public procurement to social leasing, must be used to support our industries at home.

The cars on show in Paris this week should be built by European workers, in European plants. Enough is enough.