ZF Friedrichshafen's CFO Warns of Further Cost Cuts Amid Declining Global Auto Production

According to foreign media reports, on July 10, Michael Frick, CFO of ZF Friedrichshafen, Germany's second-largest auto parts supplier, stated in an interview with WirtschaftsWoche magazine that ZF would implement stricter cost-cutting measures if global auto production continues to decline. Frick mentioned that their current performance is below expectations and there are signs that global auto production will further decrease in the second half of the year. As part of a continuing restructuring plan, ZF aims to cut up to 14,000 jobs in Germany by 2028, which is about 25% of its German workforce. ZF supplies transmission and hybrid drive system solutions to automakers and is currently facing weak demand as well as high cost pressures from the industry's transition to electric vehicles. The company is struggling with declining sales and profits. According to Automotive News' June 23 report on the top 100 global auto parts suppliers, ZF ranked 4th, a drop of two places, due to an estimated $5.6 billion reduction in automotive sales for 2024 compared to 2023. ZF had previously stated that the pace of electric vehicle adoption is noticeably slowing, with automakers changing their electrification strategies and delaying the release of electric products, leading to fewer electric platforms ordered than originally planned, resulting in excess capacity for their electric vehicle-related components. ZF had projected in December 2023 that electric vehicles would account for 55% of global auto sales by 2031, but their current forecast is now 39%. Notably, in addition to facing declining market demand and the industry's transition to electric vehicles, the European automotive sector is also dealing with multiple challenges, including tariffs, high production costs, and fierce competition from Chinese counterparts.