Business struggles or setbacks experienced by ZF in the initial half of the year
ZF Friedrichshafen Announces Major Restructuring Amid Challenging Automotive Market
ZF Friedrichshafen, the German automotive parts supplier, is intensifying its restructuring plans in 2025, aiming to address the challenges of weak demand for electric vehicles, rising costs, and high R&D expenses. The company has announced plans to cut up to 14,000 jobs in Germany by 2028, which is about one in every four positions in the country.
The restructuring aims to realign the company's operations and focus on areas with better growth potential. The Electrified Powertrain Technologies division, which has been facing heavy losses due to insufficient demand for electric drives and unprofitable pricing on conventional transmissions and hybrid components, is most affected.
ZF is also considering a carve-out or restructuring of its powertrain division, with management and unions targeting a decision by September 2025 on how to proceed. The company is managing these challenges while contending with nearly €10 billion in debt and large interest payments, which constrain its financial flexibility.
The company's financial woes are evident in its first-half results. ZF Friedrichshafen generated 10.3% less revenue in the first half of 2025, falling to 19.7 billion euros. Despite an increase in earnings before interest and taxes from 780 million euros to 874 million euros between January and June, there was still a loss of 195 million euros at the bottom line. The decrease in revenue was due to the spin-off of the axle assembly area into the joint venture ZF Foxconn.
ZF's chief financial officer, Michael Frick, expects the company to post a loss at the end of the year. CEO Holger Klein has indicated that the restructuring program will accelerate and intensify, but detailed plans on further job cuts beyond the announced figures have not been disclosed.
The global stagnating vehicle production, the slow ramp-up of electromobility, and the uncertainty caused by US tariffs are contributing to lower sales and rising costs at ZF. These challenges have not gone unnoticed by the workforce, with around 6,000 employees and employees protesting against the cost-cutting measures and planned job cuts in front of the ZF headquarters in Friedrichshafen on Tuesday.
Despite the protests, ZF remains committed to its restructuring plans. The company's liquidity remains supported by an €8.1 billion buffer from green bonds and loans, helping the company maintain stability during this transition. Agreements have been made for a further 4,700 full-time jobs to be affected by retirement or planned retirement.
ZF has already cut more than 11,000 jobs worldwide since the beginning of 2024, including 5,700 in Germany. Last year, ZF announced a significant reduction in jobs, with around 14,000 jobs to be cut by 2028. This represents a major strategic pivot by ZF to maintain competitiveness amid a challenging automotive supply environment and global economic uncertainties.
[1] BBC News [2] Reuters [3] Automobilwoche [4] Handelsblatt [5] ZF Friedrichshafen Press Release
The restructuring at ZF Friedrichshafen includes a potential carve-out or restructuring of their powertrain division, which faces heavy losses in the finance sector, particularly in the Electrified Powertrain Technologies division. The company aims to focus on areas with better growth potential in the industry and business, despite facing numerous challenges such as debt, rising costs, and uncertain market conditions.
