German automotive parts maker Schaeffler has joined other industry suppliers in issuing a bleak forecast for 2025, citing no expected recovery for the automotive market. The company faces significant challenges, with the European auto sector grappling with high production costs, the transition to electric vehicles (EVs), declining demand, and increasing competition from Chinese manufacturers.
Schaeffler, known for producing precision components for vehicles, has specifically highlighted the struggles in its e-mobility division, expecting a negative operating margin (EBIT) in the range of -14% to -17% for 2025. This reflects the difficulties the company faces in the European electric vehicle market, where the shift to EVs is proving to be a major hurdle.
The company’s recent acquisition of electric powertrain specialist Vitesco aims to bolster Schaeffler’s presence in the growing electric mobility sector, though the outlook remains cautious. CEO Klaus Rosenfeld remarked, “2025 will continue to be marked by volatility. Our cautiously optimistic outlook reflects this uncertainty.”
The impact of U.S. tariffs on Mexico and Canada further complicates Schaeffler’s prospects. Rosenfeld stated that the company will pass on the additional costs to clients, emphasizing that while the burden is manageable due to Schaeffler’s localized operations, the tariffs will ultimately lead to inflationary pressures.
Despite these challenges, Rosenfeld pointed to potential opportunities arising from Germany’s significant debt overhaul and infrastructure stimulus. Schaeffler is looking beyond automotive manufacturing, with ambitions to expand into additional industries.
Global auto production is expected to shrink by 0.5% in 2025, and Schaeffler is undergoing a major restructuring initiative. This includes cutting thousands of jobs and closing plants across Europe, as the company attempts to recover from a sharp drop in its operating margin, which fell from 7.3% to 4.5% in a single year.
To further preserve cash, Schaeffler has slashed its dividend payout by nearly 50%, reducing it to just 25 euro cents per common share. The company anticipates an EBIT margin of 3% to 5% for 2025 as part of its recovery strategy.
In summary, Schaeffler’s 2025 forecast reflects a challenging year ahead, with pressures from the transition to electric mobility, external tariff impacts, and ongoing restructuring efforts.
