OCDE - The EU automotive industry at a crossroads de 2026

Written by Andrea Garnero, Alexander Hijzen, Andrea Hofer and Alina Winter September - 2026 The EU automotive industry at a crossroads The implications of structural transformation for employment and skillsEUROPEAN COMMISSION Directorate-General for Employment, Social Affairs and Inclusion Directorate F — Employment and Social Governance, Analysis Unit F3 — Fair Green and Digital Transitions | Research

Contact: Alina Winter

E-mail: Alina.Winter@ec.europa.eu

EMPL-F3-UNIT@ec.europa.eu European Commission B-1049 Brussels, Belgium

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT Directorate for Employment, Labour and Social Affairs Jobs and Income Division Contact : Andrea Garnero E-mail : andrea.garnero@oecd.org OECD, 2, rue André Pascal, 75775 Paris Cedex 16, FranceEUROPEAN COMMISSION/ OECD European Commission and OECD

2026 The EU automotive industry at a crossroads. The implications of structural transformation for employment and skillsManuscript completed in September 2026

First edition Disclaimer: This document has been prepared by the European Commission and the OECD.

For the European Union, the opinions expressed herein are those of the authors only and should not be considered as representative of the official positions of the European Union. For the OECD, this work is issued under the responsibility of the Secretary-General and does not necessarily reflect the official views of OECD Member countries.

Luxembourg: Publications Office of the European Union, 2026

© European Union/OECD, 2026

The reuse policy of European Commission documents is implemented by Commission Decision 2011/833/EU of 12 December 2011 on the reuse of Commission documents (OJ L 330, 14.12.2011, p. 39). Unless otherwise noted, the reuse of this document is authorised under a Creative Commons Attribution

The reuse policy of European Commission documents is implemented by Commission Decision 2011/833/EU of 12 December 2011 on the reuse of Commission documents (OJ L 330, 14.12.2011, p. 39). Unless otherwise noted, the reuse of this document is authorised under a Creative Commons Attribution 4.0 International (CC BY 4.0) licence (https://creativecommons.org/licenses/by/4.0/). This means that reuse is allowed provided appropriate credit is given and any changes are indicated. ISBN 978-92-68-42544-2 doi:10.2767/9050347 KE01-26-083-EN-NThe EU automotive industry at a crossroads. The implications of structural transformati on for employment and skills 5 Contents

1. Introduction .............................................................................................. 7

2. Employment trends ................................................................................. 8

3. Workforce characteristics ..................................................................... 11

4. Job quality .............................................................................................. 15

5. The costs of job displacement .............................................................. 19

6. Policy initiatives ..................................................................................... 23

7. Concluding remarks .............................................................................. 25

8. References.............................................................................................. 28The EU automotive industry at a crossroads. The implications of structural transformati on for employment and skills

6 Key findings The European Union’s automotive sector employs over 6 million workers directly and remains a source of comparatively well-paid, secure employment. Yet the industry is undergoing deep structural change driven by electrification, digitalisation, intensifying competition from China, changing global demand patterns, evolving consumer preferences, and demographic shifts within its own workforce. Employment has held up in aggregate but shifted across regions in the EU. The employment share of automotive in the EU held up between 2008 and

2025. Central and Eastern European Member States have seen a growing share of vehicle-assembly and supplier jobs, while traditional automotive economies in western Europe have seen their positions erode, particularly since

2019. In addition, aggregate stability masks a more recent downturn, with

2025. Central and Eastern European Member States have seen a growing share of vehicle-assembly and supplier jobs, while traditional automotive economies in western Europe have seen their positions erode, particularly since

2019. In addition, aggregate stability masks a more recent downturn, with employment in vehicle manufacturing and among suppliers declining since 2019 alongside a marked contraction in production volumes.

Supply chains are more integrated across the EU, but new dependencies on China are emerging. Intra-EU sourcing of intermediate inputs rose from 17% in 1995 to 25% in 2022, while China’s share grew from near zero to 3%, concentrated in batteries and advanced electronics central to the electric vehicle transition, and is likely to have increased further since. Automotive jobs tend to be of high quality, but pressures are building. Low pay is less prevalent than in the economy at large and collective bargaining coverage remains high. However, nearly 80% of workers in car manufacturing report significant changes in their working environment, and roughly one third of those undergoing change do so without formal training, a share that rises to around 40% among suppliers. Job displacement carries severe and lasting earnings costs. Displaced automotive workers see earnings drop by 57% in the first year after mass layoffs, compared with 43% for their counterparts in services. Six years later, earnings remain 20 to 25% below those of comparable non-displaced workers. The gap with services narrows over time but does not close within six years, and larger losses in the automotive and manufacturing sectors than in services are observed in all 11 countries analysed. The capacity to anticipate and manage adjustment is unevenly distributed. Large manufacturers benefit from strong training infrastructure and collective bargaining, but smaller suppliers and car sales enterprises are considerably less well equipped, making their workers more vulnerable to the structural changes ahead.The EU automotive industry at a crossroads. The implications of structural transformati on for employment and skills 7

1. Introduction The automotive sector is a cornerstone of the European economy, contributing

less well equipped, making their workers more vulnerable to the structural changes ahead.The EU automotive industry at a crossroads. The implications of structural transformati on for employment and skills 7

1. Introduction The automotive sector is a cornerstone of the European economy, contributing over 7% of EU gross domestic product, a third of private R&D spending, and some 6 million jobs (ACEA, 2024; Eurofound, 2025; European Commission, 2025). In several European countries, the industry is deeply embedded in regional industrial structures, anchoring complex ecosystems of suppliers, engineering services and training institutions built up over decades. For millions of European workers, automotive employment has long offered comparatively well-paid and secure jobs, making the sector a pillar of economic prosperity and security.

The current adjustment is not the sector’s first. European automotive manufacturing has passed through successive waves of structural change, from the restructuring that followed the oil shocks of the 1970s, to the diffusion of lean production and just -in-time methods in the 1980s and 1990s, the eastward relocation of assembly and component production after enlargement, and the contraction that followed the 2008 financial crisis. Yet the industry now stands at a crossroads of several powerful and mutually reinforcing megatrends. The shift towards electric vehicles is triggering a fundamental restructuring of the value chain, reducing the number of components needed in a vehicle, altering skills requirements and reshaping the relationship between manufacturers, suppliers and new entrants in batteries and electronics. Digitalisation is transforming vehicles into software -defined products, accelerating automation and creating demand for entirely new skills. Intensifying global competition, most notably from China, and changes in global demand patterns are challenging Europe’s traditional strengths in high -value automotive components. Mobility demand is itself evolving. The volume of private car travel, the size and type of vehicles used, the pace of modal shift towards collective transport and the development of circular activities such as repair, refurbishment and remanufacturing will all influence the scale and the composition of future

components. Mobility demand is itself evolving. The volume of private car travel, the size and type of vehicles used, the pace of modal shift towards collective transport and the development of circular activities such as repair, refurbishment and remanufacturing will all influence the scale and the composition of future vehicle demand, and hence of automotive employment (ITF, 2023; ITF, 2023) . And the sector’s own workforce is ageing, with a declining capacity to attract younger workers precisely when the need for new skills is greatest. This analysis examines employment trends, workforce composition, job quality and the institutional frameworks shaping adjustment in the EU automotive sector over the past two decades. It draws on a broad range of data sources, including the EU Labour Force Survey, the EU Structure of Earnings Survey, the OECD Survey of Adult Skills (PIAAC), OECD input-output tables, and harmonised linked employer-employee data from 11 European OECD countries. The future trajectory of the sector remains highly uncertain , requiring effective anticipation and management of ch ange, bold transition planning and difficult strategic choices on the way. The trends documented here do not purport to predict howThe EU automotive industry at a crossroads. The implications of structural transformati on for employment and skills 8 these forces and choices will play out, but they offer evidence-based pointers for the design of employment, skills and industrial policies that can help ensure the automotive transition is managed in a way that is both economically efficient and socially fair.

2. Employment trends Estimates of the employment footprint of the automotive industry vary considerably depending on the data source and the range of activities included.

This analysis adopts a relatively broad definition of the automotive sector which encompasses not only core vehicle manufacturing and car sales as ACEA and Eurofound do but also upstream industries that are closely linked to car production – see Box 1. Box 1: How is automotive defined? Where data sources provide a 3 -digit NACE classification (as in the EU Labour Force Survey and PIAAC), the automotive sector is defined as comprising three main segments:

production – see Box 1. Box 1: How is automotive defined? Where data sources provide a 3 -digit NACE classification (as in the EU Labour Force Survey and PIAAC), the automotive sector is defined as comprising three main segments: Vehicle manufacturing: This covers the manufacture of motor vehicles (NACE C29.1) and the manufacture of bodies, trailers and semi -trailers (NACE C29.2). This segment is highly capital -intensive and dominated by a relatively small number of so -called original equipment manufacturers (OEMs), which operate large-scale industrial sites covering the main stages of vehicle production (stamping, body assembly, painting and final assembly) as well as the in -house manufacturing of key components such as engines and transmissions.

Supplier industry: This corresponds to the manufacture of parts and accessories for motor vehicles (NACE C29.3). The supplier industry is more fragmented than vehicle manufacturing and more exposed to the transition from internal combustion engines (ICE) to battery electric vehicles (BEV), as many of its firms specialise in components that will no longer be needed in electrified powertrains.

Sales and repair : This encompasses the wholesale and retail trade and repair of motor vehicles and motorcycles (NACE G45). The structure of this segment differs markedly from vehicle manufacturing. It is characterised by a very large number of small and micro -enterprises. Maintenance and repair activities, in particular, are dominated by small workshops, while large dealership chains and aftermarket retailers account for a significant share of overall employment in sales and the aftermarket (secondary parts).The EU automotive industry at a crossroads. The implications of structural transformati on for employment and skills

9 In addition, the analysis also extends to those industries which have a close degree of dependence on car manufacturing (“dependent industries”) , identified as the three industries whose outputs flow most heavily into the automotive value chain according to OECD input-output tables: the manufacture of rubber and plastic products (NACE C22), the manufacture of basic metals (NACE C24), and the manufacture of fabricated metal products, except

identified as the three industries whose outputs flow most heavily into the automotive value chain according to OECD input-output tables: the manufacture of rubber and plastic products (NACE C22), the manufacture of basic metals (NACE C24), and the manufacture of fabricated metal products, except machinery and equipment (NACE C25). These upstream industries supply essential intermediate inputs to the automotive sector and, more than other industries, will be affected by shifts in vehicle production. Where only 2 -digit industry classification is available, as is the case in the Structure of Earnings Survey, vehicle manufacturing and the supplier industry are grouped together under NACE C29. Although aggregate employment in the EU automotive sector (manufacturing, suppliers and sales) has held up over the past two decades, the composition and geography of these jobs have shifted markedly. The four panels of Figure 1 illustrate how the employment weight of each subsector has evolved across selected western and eastern European countries where the automotive industry is important. Beneath an apparently stable headline figure, the figure reveals divergent trajectories. In addition, the aggregate picture masks the recent downturn: employment in EU vehicle manufacturing fell by close to 9% between 2019 and 2023, the supplier industry shed some 110 000 jobs over the same period, and announcements of large-scale restructuring accelerated markedly in 2024 and early 2025 (Eurofound, 2025; European Commission, 2025).The EU automotive industry at a crossroads. The implications of structural transformati on for employment and skills 10 Figure 1. The employment share of automotive has remained broadly stable in the EU but shifted across regions Percentage of total employment, 2008-2025

Source: EU-LFS.

In vehicle manufacturing (Panel 1), employment shares have remained broadly stable or increased slightly in several countries since 2008, despite the overall decline in manufacturing employment in the EU over the same period (Eurofound, 2025). Germany – employing more vehicle manufacturing workers than all other EU countries combined in 2019 – maintained a high and stable share until a

stable or increased slightly in several countries since 2008, despite the overall decline in manufacturing employment in the EU over the same period (Eurofound, 2025). Germany – employing more vehicle manufacturing workers than all other EU countries combined in 2019 – maintained a high and stable share until a marked decline after 2019. France, by contrast, recorded a steady and structural decline throughout the period. In central and eastern Europe, Czechia and, to a lesser extent, Slovakia and Hungary show rising or consistently high employment shares, reflecting their deeper integration into European automotive value chains. The supplier industry (Panel 2) exhibits the strongest cross -country divergence. Employment shares expanded substantially in several central and eastern European Member States, notably Czech ia, Hungary, Romania and Slovakia. This reflects both the outsourcing of non -core activities by OEMs and the increasing integration of European supply chains (see Box 2), with supplier operations relocating from western to eastern Europe to benefit from lower labour costs and proximity to new assembly plants. Germany, while still the largest supplier employer in absolute terms, experienced some decline since 2021, and France continued its longer -term contraction. In recent years, several easternThe EU automotive industry at a crossroads. The implications of structural transformati on for employment and skills 11 European countries show a levelling off or reversal, coinciding with reports of some supplier activities shifting further to lower -cost locations outside the EU, including Africa and Asia (Eurofound, 2025). Employment in sales and repair (Panel 3) has been the most stable of the four segments across all countries, consistent with the service -oriented and geographically distributed nature of this activity. Romania stands out as a partial exception, with a period of notable growth in recent years possibly linked to the ageing vehicle fleet and large imports of used cars which create strong demand for maintenance, repair services, and spare -parts retail. Unlike manufacturing, which is concentrated in specific industrial regions, vehicle sales, maintenance and repair operations are spread across national territories in response to local

ageing vehicle fleet and large imports of used cars which create strong demand for maintenance, repair services, and spare -parts retail. Unlike manufacturing, which is concentrated in specific industrial regions, vehicle sales, maintenance and repair operations are spread across national territories in response to local consumer demand. The pattern also reflects the dual structure of this segment, which combines a large number of small and micro -enterprises, particularly in vehicle repair, with larger dealerships that maintain steady employment levels. Finally, industries more dependent on car manufacturing (Panel 4) present an overall declining trend. These upstream sectors, which include the manufacture of rubber and plastic products, basic metals, and fabricated metal products, are indirectly linked to the automotive value chain through their intermediate inputs. Their employment shares have contracted in most countries over the period, consistent with broader deindustrialisation trends affecting heavy and materialsintensive manufacturing in the EU. The only exception is central and eastern Europe where the share has held up.

3. Workforce characteristics Alongside the geographical shifts described above, the composition of the automotive workforce has been evolving. Figure 2 illustrates the current workforce profile across subsectors and the changes that have occurred since 2008 in terms of gender, age, education, skills and firm size. Three main trends can be identified: First, the automotive sector remains overwhelmingly male. In car manufacturing, women account for less than 20% of employment, 16% in car sales while it is higher among suppliers (32%). Since 2008, the female share of employment has increased most in car manufacturing, rising by almost 5 percentage points (Panel B). This is partly explained by increasing automation in manufacturing, which has reduced the share of physically demanding blue -collar roles and made the work more accessible to a broader range of workers (Eurofound, 2025).

Second, employment is concentrated among prime -age workers. Workers aged 30 to 49 make up around half of employment in car manufacturing and among suppliers, and close to half in the other subsectors. The share of workers aged

more accessible to a broader range of workers (Eurofound, 2025). Second, employment is concentrated among prime -age workers. Workers aged 30 to 49 make up around half of employment in car manufacturing and among suppliers, and close to half in the other subsectors. The share of workers aged 50 to 64 is substantial in all segments, ranging from roughly 28% in carThe EU automotive industry at a crossroads. The implications of structural transformati on for employment and skills 12 manufacturing and sales to over 30% in dependent industries. Since 2008, all automotive subsectors have recorded a marked increase in the share of workers aged 50 to 64, with gains of between 8 and 11 percentage points since 2008. There has also been a significant decline in the proportion of younger workers aged 15 to 29, which is stronger than in the total economy. This reflects not only general demographic ageing trends and the contraction of the sector but also challenges in attracting sufficient young talent to replace experienced workers approaching retirement (ACEA; Adecco, 2025). Third, th e educational profile of the automotive workforce differs considerably across subsectors. Medium -level qualifications (ISCED 3 to 4) dominate in all segments, accounting for nearly 60% or more of employment among suppliers, in car sales and in dependent industries but the share of workers with tertiary education (ISCED 5 to 8) is increasing. This reflects the growing demand for engineering, ICT and supervisory competencies driven by the increasing complexity of vehicle design, the integration of digital tec hnologies and the progressive automation of production processes (ACEA; Adecco, 2025) . The skills dimension, defined in terms of broad occupations, provides a broadly similar picture as education. In addition, the firm-size dimension underscores the markedly different industrial structures across subsectors. Car manufacturing is overwhelmingly concentrated in large enterprises: almost 90% of workers are employed in firms with 50 or more employees. Among suppliers, roughly 83% of employment is in firms of 50 or

picture as education. In addition, the firm-size dimension underscores the markedly different industrial structures across subsectors. Car manufacturing is overwhelmingly concentrated in large enterprises: almost 90% of workers are employed in firms with 50 or more employees. Among suppliers, roughly 83% of employment is in firms of 50 or more but firms are typically much more fragmented than in car manufacturing. This is consistent with the highly capital -intensive nature of vehicle and parts production, where scale economies and just -in-time supply chain integration favour large units. By contrast, employment in car sales and repair is concentrated in small and medium -sized firms. Firms with fewer than 10 employees account for over 40% of employment, and those with 10 to 49 employees for a further 30%.The EU automotive industry at a crossroads. The implications of structural transformati on for employment and skills 13 Figure 2. An evolving workforce: persistent gender gaps, demographic ageing and growing skill needs EU27 averages

Source: EU-LFS.

Box 2. Supply chains have become more integrated across Europe, but new dependencies – especially on China – are emerging Europe’s automotive industry has evolved over the past three decades from a collection of nationally segmented production systems into a tightly interdependent regional value chain. Figure 3 illustrates one key dimension of this integration: the origin of intermediate inputs used by the EU car industry. In 1995, domestic sourcing accounted for over 76% of all intermediate inputs, with other EU27 countries providing roughly 17% and the rest of the world a marginal share. By 2008, the domestic share had fallen to 70% while intra -EU sourcing rose to 21%, reflecting the deepening of cross -border supply relationships, particularly linking suppliers in central and eastern Europe with assemblyThe EU automotive industry at a crossroads. The implications of structural transformati on for employment and skills 14 operations in Germany and France. By 2022, this pattern had intensified further: the domestic share dropped to 62% and intra-EU inputs rose to 25%, confirming

employment and skills 14 operations in Germany and France. By 2022, this pattern had intensified further: the domestic share dropped to 62% and intra-EU inputs rose to 25%, confirming the development of a "Factory Europe" model built on functional specialisation across territories. Figure 3. Sourcing of intermediate inputs by the EU automotive industry has become more international Share of intermediate inputs in total output used by the EU automotive industry, by origin, 1995, 2008, 2022, percentages

Source: OECD Inter -country Input -Output Tables, August 2025 edition

https://www.oecd.org/en/data/datasets/inter-country-input-output-tables.html. At the same time, China’s share of intermediate inputs, negligible in 1995 and still marginal in 2008, had risen to 3% by 2022. This increase reflects the growing role of Chinese suppliers in strategic upstream technologies, most notably batteries, electric motors and advanced electronics, all of which are central to the shift towards electric vehicles. Chinese producers benefit from major competitive advantages, including control over mineral supply chains, economies of scale from a large domestic market, and sustained state-backed investment in electricvehicle technologies (Eurofound, 2025). Europe's traditional strength in highvalue automotive components, built on decades of cross -border specialisation and shared industrial commons, is now being tested by a new form of external dependency in precisely the technologies that will define the future of the industry (de Soyres, Fisgin, & Gaillard, 2025; Grjebine, Lefebvre, & Torres, 2026). A similar pattern of integration happened on the demand side. Over the past three decades, the destination of European -made outputs shifted progressively away from domestic markets toward s broader intra -EU and international sales . The share of automotive output1 sold to final consumers in domestic markets fell from 1 More precisely, it is the value of output from the automotive sectors that is purchased by households in each destination market for final consumption. Domestic 76.3% EU27 17.1%

share of automotive output1 sold to final consumers in domestic markets fell from 1 More precisely, it is the value of output from the automotive sectors that is purchased by households in each destination market for final consumption. Domestic 76.3% EU27 17.1% China 0.1% GBR 1.9% USA 0.9% Other 3.6% 1995 Domestic 62% EU27 25% China 3% GBR 2% USA 1% Other 7% 2022 Domestic 70% EU27 21% China 1% GBR 2% USA 1% Other 5% 2008The EU automotive industry at a crossroads. The implications of structural transformati on for employment and skills 15 58.0% in 1995 to 43.4% in 2022, while the share going to final consumers in other EU countries increased from 23.8% to 29.7%. International markets also gained importance, with China emerging as a strategically significant export destination for European manufacturers : its share of all demand for European -made automotive output rose from virtually zero in the late 2000s to 2.3% in 2022. That configuration is now under strain as European brands are facing intensifying competition from Chinese players particularly in battery electric vehicles.

4. Job quality Figure 4 provides a comprehensive picture of job quality across automotive subsectors compared with the economy as a whole by looking at the main dimensions of the OECD Job Quality Framework (Cazes, Hijzen, & Saint-Martin,

2015):2 Earnings in the automotive sector, measured monthly, are broadly in line with those in the wider economy, both in terms of level and distribution. Median earnings in car manufacturing are above those in the general economy, while in car sales and dependent industries they are broadly aligned. The share of low-paid workers (those earning below two-thirds of the median) is also markedly lower in car manufacturing and among suppliers (5.8%) than in the economy as

earnings in car manufacturing are above those in the general economy, while in car sales and dependent industries they are broadly aligned. The share of low-paid workers (those earning below two-thirds of the median) is also markedly lower in car manufacturing and among suppliers (5.8%) than in the economy as a whole (14.8%). 3 By contrast, in car sales, at 13.8%, low pay is closer to the economy-wide average, consistent with its more fragmented, SME -dominated structure. Labour-market security is comparatively strong in the automotive sector. Fixedterm contracts, including involuntary ones, are less prevalent in all car sectors than in the general economy, in particular in car manufacturing and suppliers. Looking at the quality of the working environment, working-time arrangements reveal the distinctive rhythm of automotive manufacturing. While the share of workers on long hours and Saturday and Sunday work is generally lower than in the broader economy, shift work (and hence night work) in manufacturing is markedly more prevalent: 37% of workers in car manufacturing and 48% among suppliers work in shifts, compared with 18% in the economy at large. This reflects 2 Due to limitations in the availability of sectoral breakdowns in the data, the indicators presented in this brief capture each dimension of job quality only in part. Job strain, and physical health risk factors in particular, is not fully reflected in the working environment dimension. 3 Part-time work is also less prevalent in car manufacturing and among suppliers (respectively, 5.9% and 3.3% of employment) than in the economy as a whole (18.7%), and involuntary part-time is negligible ac