Unveiling Bosch's Forecast: Global Vehicle Production Growth Likely to Reach a Modest 1 Percent
Insider Interview with CFO Forschner
Auto manufacturers face a challenging year in 2025
Page 8 Exclusive Interview
The preeminent automotive powerhouse, Bosch, offers a gloomy outlook for business expansion in the forthcoming year. Markus Forschner, the company's Chief Financial Officer, candidly shares his insights during a CFO interview, stating, “We’re projecting that global vehicle production will grow by a maximum of 1 percent at best.” Furthermore, he predicts that the company will be around 4 percent below the previous year's level by 2024.
The forecast for Europe is particularly grim, according to Forschner: “We anticipate another challenging and economically weak year for Europe.” However, China’s loosening of monetary and fiscal policies could spur growth, and the U.S. Federal Reserve’s potential interest rate cuts might lend a helping hand.
Thousands of jobs are at stake
Automotive suppliers are battling not just weak demand but also a slower transition to vehicle technology than anticipated. At Bosch, this issue predominantly hinders developments in automated driving and electromobility. “We had projected significantly higher volumes for both,” Forschner confesses. “And we don’t foresee demand escalating substantially in the next year or two.”
Atradius, a credit insurer, branded the automotive industry as the sector with the highest insolvency risk in Germany. The number of companies facing insolvency is anticipated to escalate in 2025. Industry heavyweights, including Bosch, ZF, Continental, and Schaeffler, have announced significant job reductions. Bosch alone faces the prospect of losing approximately 13,000 jobs, with around 8,600 at risk in the Mobility segment. When queried about the possibility of additional job cuts, Forschner responds, “We can’t rule out further adjustments.”
Behind the Numbers
Post-pandemic semiconductor availability improvements helped resolve auto production bottlenecks, pushing output back to pre-COVID levels in many regions. Global EV sales grew by an impressive 35 percent in 2023, driven by subsidies (China’s NEV policy, U.S. Inflation Reduction Act credits) and an expanding charging infrastructure. Consumer demand remained resilient despite mounting inflation, offering support, particularly in premium and EV segments.
China’s auto production advanced by around 5 percent in 2023 (versus the global average of 1 percent), mainly due to aggressive NEV subsidies, price wars among domestic brands (BYD, NIO, and Tesla), and an export boom. China surpassed Japan to become the world’s leading auto exporter in 2023. China’s dominance in battery materials and EV components also bolstered global production stability.
Although the Fed did not cut rates in 2023, instead raising them to 5.25-5.5 percent by July, expectations of future cuts (priced into markets by late 2023) contributed to improved auto loan affordability outlooks for 2024. Inflation began easing in the second half of 2023, which also helped boost consumer purchasing power without Fed cuts. The U.S. Federal EV tax credits (worth $7,500 per vehicle) directly stimulated domestic EV production.
However, Bosch's 1 percent growth prediction likely assumes regional disparities. While China’s gains mitigate stagnation in Europe and slower U.S. growth due to high rates, Fed policy's indirect role is expected to improve mid-term auto investment sentiment. In 2023, borrowing costs remained high despite the positive effects of anticipated rate cuts and IRA incentives in the U.S.
- In the forecast by Bosch's Chief Financial Officer, Markus Forschner, global vehicle production growth is projected to be a maximum of 1 percent by 2024.
- The outlook for Bosch's business expansion in the coming year is gloomy, with the company anticipating a 4 percent decline compared to the previous year's level.
- Electromobility developments at Bosch are facing challenges due to a slower transition to vehicle technology than anticipated, with the company not foreseeing substantial demand escalation in the next year or two.
- In 2025, the automotive industry is expected to see an increase in the number of companies facing insolvency, including industry heavyweights like Bosch, ZF, Continental, and Schaeffler, with Bosch potentially losing around 13,000 jobs.
