Bosch, a major player in technology and services sector based in Frankfurt, Germany, announced on Friday plans to trim its automotive division’s workforce by up to 5,500 jobs over the coming years. This decision highlights the ongoing challenges faced by the automotive industry both in Germany and internationally.

The company attributed this significant job cut to several factors including stagnant global automotive sales, an oversupply of production capacity in relation to potential sales, and a slower pace of transition towards vehicles that are powered by electric and controlled by advanced software.

Out of the total job reductions, around 3,500 positions are expected to be eliminated by the end of 2027. This will largely impact the segment of the company committed to developing cutting-edge driver assistance, automated driving technologies, and centralized software for vehicles. Bosch, headquartered in Gerlingen near Stuttgart, indicated that close to half of these job losses will affect sites within Germany.

“The automotive sector is experiencing major overcapacity,” Bosch noted in its statement. “Moreover, the anticipated growth in the market for emerging technologies is not unfolding as we had initially projected. Presently, numerous projects in this segment are either being delayed or discontinued by automobile manufacturers.”

Additionally, a plant located in Hildesheim is projected to see a reduction of 750 positions by the end of 2032, with 600 of those positions eliminated by 2026. The facility in Schwaebisch Gmund is expected to phase out approximately 1,300 jobs between 2027 and 2030.

These planned reductions remain in the preliminary stages, pending further discussions with employee representatives, and will be executed in a manner deemed socially responsible by the company. A prior agreement ensuring no layoffs in Germany until 2027 for many employees, and extending to 2029 in specific cases, will continue to be upheld.

Bosch’s mobility division employs around 230,000 individuals within a total workforce of 429,000 globally. In addition to fulfilling its role as a supplier to the automotive sector, Bosch manufactures a wide range of products including equipment for factories and buildings, as well as software solutions that encompass industrial boilers, waste-heat recovery systems, video surveillance systems, and power tools.