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Have we hit peak automotive production?

Global automotive production may have already peaked and is likely to remain in a steady decline, the CEO of a top engineering company said this week.


Volkmar Denner, CEO of German giant Bosch, shared his predictions during a news conference in Stuttgart while announcing plans to cut jobs in response to decreasing demand.

"It could well be that we have passed the peak of automotive production," Denner told Automotive News.

Denner said he believes the industry will not see an increase in production before 2025.

Overall, the company expects global automotive production to fall for a third consecutive year in 2020, with a drop of 2.6 per cent anticipated.

Headquartered out of Gerlingen, Germany, Bosch is one of the world's top auto-parts suppliers. It also has a major regional headquarters in Australia.

However, in response to a decline in earnings in 2019 and decreased demand in the US, China and Europe, Denner said the company will be making staffing changes.

These changes will take the form of shorter hours, severance packages and voluntary redundancies, but Denner did not specify the number of global staff cuts planned.

This follows Bosch reducing its global headcount by 6800 in 2019, bringing the overall global staff tally to 402,800.

Before interest and taxes, Bosch's full-year earnings in 2019 were €3 billion (AU$4.9 billion), down from €5.4 billion (AU$8.8 billion) the year prior.

While Denner acknowledged a rise in electric vehicle production would create job opportunities in the future, he expected it would have an impact on jobs in the short-term.

Bosch revealed that only one human worker is needed in the production of an electric motor, compared with 10 workers for a diesel injection system and three for a gasoline system.

In the same meeting with journalists, Denner expressed concern the current outbreak of coronavirus could impact supply chains.

"We are naturally concerned, but on the basis of the facts today, we have no disruption to our business or supply chain," he said, according to Channel News Asia.

"We need to wait to see how things develop. If this situation continues, supply chains will be disrupted. There are forecasts that predict the peak for infections will drag on until February or March."

China is home to the largest Bosch workforce outside of Germany, with 23 manufacturing facilities across 60 locations.

Specifically, it has two plants and 800 employees in Wuhan, where the virus originated.

Susannah Guthrie

Susannah Guthrie has been a journalist for over a decade, covering everything from world news to fashion, entertainment, health and now cars. Having previously worked across titles like The New Daily, Elle, Harper's Bazaar, People Magazine and Cosmopolitan, Susannah now relishes testing family cars with the help of her husband and two-year-old son.

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