• Approximately 34,000 jobs will be lost in the German automotive industry in 2026
• AI investments will more than triple in 2026 compared to the previous year
• Large majority of top managers are convinced of the breakthrough of e-mobility
• Executives see no progress by policymakers on framework conditions for the automotive industry

Stuttgart, August 27th 2026

Competitors from China continue to push the German automotive industry out of profitable markets in a massive scale. In order to remain competitive in the long term, the industry is undergoing a process of repositioning. 92 percent of board members and managing directors in the German automotive industry consider innovation to be crucial, as cost leadership is not achievable. Several strategic levers are intended to act as catalysts, including the targeted use of AI, the realignment of strategies and business models, and continued strict cost optimization. These are findings of Horváth's 7th Annual "CxO Priorities" study.

The German automotive industry is accelerating the pace of technological transformation. In the ranking of strategic priorities on the top management agenda, AI transformation ranks second. Compared to 2025, the priority score has increased further. This is also reflected in budgets: In 2026, the German automotive industry is investing approximately 1.4 percent of its revenue in the development and deployment of AI, more than three times as much as in the previous year. It thus significantly exceeds other manufacturing sectors, which invest an average of 0.5 percent of their revenue.

Majority of Companies Are Working on End-to-End Processes

“The maturity level of AI adoption has increased significantly compared to the previous year,” says Horváth Partner Frank Göller. “Nearly all surveyed companies are now intensively engaged with AI, have an AI strategy, and have already defined a roadmap for further expansion. At the same time, we are observing a clear shift: The focus is moving from individual AI use cases toward optimized end-to-end processes with interconnected AI agents.”

Over the next three years, these AI efforts are expected to pay off through significant productivity gains. Manufacturers expect a boost in IT and digitalization (20 percent) as well as in research and development (19 percent). However, individual top managers' estimates of the actual level of productivity gains differ by as much as 20 percentage points across specific areas of application. “AI is a new technology for which there is not yet a long history of practical experience. The technical possibilities have developed in a revolutionary way over the past twelve months alone. The wide range of productivity expectations reflects, on the one hand, high expectations and, on the other hand, uncertainty among top management about how quickly the potential can actually be realized in day-to-day operations,” explains Frank Göller.

Cost Discipline Remains the Highest Strategic Priority

Automotive companies are planning for an EBIT margin of 4.7 percent in 2026, less than half the average across all industries (10.1 percent). The pressure on profitability is enormous and explains why companies are not scaling back their strict cost optimization efforts. As in the previous year, improving cost and earnings structures remains the most important strategic priority for the automotive industry. For 2026, cost savings amounting to 3.8 percent of revenue are planned (2025: 2.8 percent). More than half of these savings are expected to be achieved in two categories: material costs (35 percent) and general administrative expenses (22 percent).

The automotive industry is also taking action in visible areas. “Based on our extrapolation of the study results and using total employment figures from the German Association of the Automotive Industry (VDA), we estimate that approximately 34,000 jobs will be eliminated in Germany. From a global perspective, however, employment among the surveyed companies is expected to decline only moderately, by around 0.2 percent, as these are primarily global corporations. The reduction of jobs in Germany and Central Europe therefore stands in marked contrast to largely stable employment worldwide and is primarily the result of relocation activities,” says Frank Göller. 84 percent of companies expect employment to increase in India, followed by Africa (67 percent) and North America (61 percent).

Labor costs play a central role in these decisions, along with location factors such as permitting procedures, flexibility, and bureaucracy. “Top managers in the automotive industry have lost significant confidence in policymakers in Berlin and Brussels compared to the previous year. This became very clear in our personal discussions,” says Frank Göller. 92 percent of top managers state that the German federal government has failed to improve framework conditions for the automotive industry. By contrast, 84 percent were still optimistic last year that the new federal government would strengthen competitiveness. Only 26 percent of respondents believe that the European Union will successfully reduce bureaucracy.

Continued Investment in Germany

Despite the challenging conditions, German companies plan to allocate 34 percent of their investments to their home market over the next five years. A significant portion of these investments is necessary to prepare existing sites for new vehicle models, for example through automation and the use of AI. Two-thirds of the surveyed CxOs remain optimistic that battery electric vehicles (BEVs) will achieve a breakthrough in Europe and Germany within the next three years.

“The study results show that the repositioning of the automotive industry is taking place on several levels. Companies continue to improve their cost structures, both in products and in plants, as well as across the overall organization. At the same time, they are investing in future technologies and adapting their strategies and business models in order to secure their competitiveness,” says Horváth Partner Frank Göller.

About the Study

For the 7th Annual Horváth study “CxO Priorities 2026”, in-depth interviews were conducted with more than 1,000 board members and executive management representatives of large internationally active companies, including 90 OEMs and suppliers, the majority of them based in Germany. The interviews were conducted in the second quarter of 2026 and analyzed in July 2026.