Published on: March 19, 2026 / Updated on: March 19, 2026 – Author: Konrad Wolfenstein
Billions in losses and 14,000 jobs at risk: How flagship supplier ZF is fighting for survival – Image: Xpert.Digital
Debt trap and electric car crisis: The dramatic collapse of the German automotive giant ZF
Breakup averted, family silver sold: The radical rescue mission at automotive supplier ZF
When a tanker threatens to capsize in a storm: "A perfect storm" – Why the German flagship company ZF is suddenly deep in the red
ZF Friedrichshafen, Germany's second-largest automotive supplier, is facing the most severe crisis in its more than 100-year history. In fiscal year 2024, the company recorded a net loss of just over one billion euros – after a profit of 126 million euros the previous year. This figure does not represent a temporary slump, but rather the result of a cascade of structural missteps, cyclical disruptions, and industry-wide transformation dynamics that have accumulated over several years.
From gearbox manufacturer to global takeover machine: The end of the growth logic
The story of the current disaster doesn't begin in the crisis year of 2024, but rather with the ambitious expansion strategy of the 2010s. ZF was founded in 1915 in Friedrichshafen on Lake Constance as Zahnradfabrik GmbH (Gear Factory Ltd.) to manufacture transmissions for aircraft and automobiles. Over decades, this specialized medium-sized company transformed into a global corporation through organic growth and targeted acquisitions – until management made a decisive strategic shift.
In 2015, ZF acquired the US automotive supplier TRW Automotive for approximately $12.4 billion. This instantly doubled the company's workforce to over 130,000 employees and its revenue to around €29 billion. The logic behind the acquisition was industrially sound: TRW was a leading provider of safety systems, brakes, and driver assistance technologies – technologies that were gaining strategic importance in the age of electromobility and autonomous driving. However, a further major acquisition – the US specialist WABCO for around $7 billion – piled the two takeovers into a mountain of debt that has been crushing the company ever since.
The two mega-acquisitions totaled around 20 billion US dollars. Financing was almost entirely through debt – bank loans, promissory note loans, and bonds. In the low-interest-rate environment of the 2010s, this seemed manageable. But when global interest rates rose sharply from 2022 onward, coinciding with a collapse in revenue, the debt burden hit like a bombshell.
Sales collapse and margin erosion: The bare figures
The 2024 financial results are sobering. Group sales fell by around eleven percent to €41.4 billion – compared to €46.6 billion in the previous year. Formally, this decline is partly due to the deconsolidation of the axle assembly systems product line, which alone accounted for around €2.6 billion in sales. Adjusted for this one-off effect, the organic decline was still around three percent – in a market environment where stagnation would be considered a success.
Adjusted operating profit before interest and taxes (EBIT) fell from €2.4 billion in 2023 to just €1.5 billion – a decline of around €900 million. The adjusted EBIT margin collapsed from 5.1 to 3.6 percent. By comparison, industry leaders such as Schaeffler or Bosch operate with margins between five and nine percent in normal cycles. After accounting for interest expenses, ZF is left with virtually nothing.
The real crux of the matter lies in the interest burden. Net financial liabilities rose to €10.46 billion at the end of 2024 – slightly higher than the €9.98 billion of the previous year. ZF pays over €600 million in interest annually on this mountain of debt, and under the new CEO Mathias Miedreich, this figure has even exceeded €700 million. Added to this are substantial provisions for restructuring costs of around €600 million, which contributed significantly to the billion-euro loss. A new bond that ZF was forced to issue in the summer of 2024 carried an interest rate of seven percent – compared to two percent for a similar transaction in 2019. This disparity starkly illustrates how the capital market assesses the company's credit risk.
The perfect storm: Why multiple crises hit at once
ZF CEO Holger Klein, speaking at the presentation of the company's financial results, described the situation as a "perfect storm" that had hit the industry. This is not a rhetorical device, but a precise description of the situation: Several shockwaves are hitting the company simultaneously and reinforcing each other.
First, a generally weak economy is paralyzing automotive production worldwide. ZF is highly dependent on a few major customers – especially Volkswagen, BMW, and Stellantis. If these companies reduce their production figures, ZF's order volume and revenues will collapse immediately. Since Volkswagen itself is reeling from overcapacity, factory closures, and declining market share, the crisis is seamlessly spreading along the supply chain.
Secondly, the sluggish transition to electromobility has placed ZF in a strategically precarious predicament. The company invested billions in new electric drive axles and electronic components – anticipating a significantly faster ramp-up of electric vehicles. This ramp-up failed to materialize. At the same time, conventional combustion engine transmissions are increasingly losing importance. ZF is caught between two worlds: too deeply rooted in its old business, and having entered the new one too early and at too high an expense. Several electromobility projects with customers have since been prematurely terminated because they no longer achieved the projected profitability.
Thirdly, competitive pressure from China is growing with dramatic momentum. While German suppliers have grown by an average of 5.7 percent annually since 2020, Chinese competitors have achieved 14.7 percent. Chinese automakers and component suppliers are pushing into markets where ZF has previously enjoyed a comfortable position, using aggressive pricing and increasingly sophisticated technology. The growing share of Chinese vehicle platforms is also reducing the demand for Western supplier components.
Job cuts and social dynamite: 14,000 jobs on the brink
Financial pressure is forcing a social restructuring of historic proportions. By the end of 2028, ZF plans to cut up to 14,000 jobs in Germany alone – that's roughly one in four jobs in the country. Worldwide, ZF currently employs around 161,600 people, about four percent fewer than last year. Several smaller plants have already been closed.
The restructuring focuses particularly on the so-called E-Division – the drive technology division encompassing both conventional transmissions and electric drive technologies. At least 7,600 of the planned job cuts by 2030 are slated for this division. The works council and the IG Metall union have mounted massive resistance against the original plans to completely spin off or sell the division. Large-scale protests erupted in the summer of 2025, with around 6,000 employees taking to the streets.
The dispute over the powertrain division also had indirect consequences for the company's management. In September 2025, the supervisory board unexpectedly parted ways with CEO Holger Klein in the middle of the IAA motor show in Munich. Mathias Miedreich, previously head of the E-Division, took over as his successor and quickly reached a compromise with the works council: The division would remain with ZF, but would undergo a major restructuring. The company is relying on phased retirement and early retirement to avoid layoffs – a socially responsible approach, but one that also costs time and money.
Strategic downsizing: Selling off family assets to pay off debts
The new course under Miedreich is clear: debt reduction has absolute priority. In his first public statement as CEO, he put it bluntly: "Debt reduction is a priority; for that, we need cash flow." The package of measures essentially consists of three parts: efficiency programs (Perform 2026), the reduction of unprofitable orders, and the sale of business units.
The most prominent example of the latter is the sale of the ADAS business unit for driver assistance systems to Harman International, a wholly owned subsidiary of the South Korean technology giant Samsung, for an enterprise value of €1.5 billion. This resulted in the transfer of approximately 3,750 employees. Harman is acquiring computer platforms, smart cameras, radar technology, and ADAS software – technologies in which ZF considered itself a global market leader.
This sale is strategically ambivalent. On the one hand, it provides ZF with urgently needed liquidity and reduces its debt by a good ten percent. On the other hand, the company is relinquishing precisely those technological fields that will gain in value in the age of software-defined vehicles. Critics see this as a sell-off of innovation potential – forced by the crushing burden of legacy debt.
Systemic dimension: ZF as a reflection of an industry crisis
The crisis at ZF is not an isolated case. It is a symptom and reflection of a broader transformation in the European automotive supply industry. According to the European automotive suppliers association CLEPA, around 350,000 jobs across Europe are at risk by 2030. Between 2024 and 2025 alone, 104,000 job cuts have been announced in the sector. Over 75 percent of suppliers expect profit margins to fall below the five percent threshold necessary for investment.
ZF exemplifies a strategy that seemed rational during the low-interest-rate period: investing borrowed money in future mobility technologies to secure an early competitive advantage. This logic has collapsed – not because the investment assumptions were wrong, but because the timelines of the transformation are significantly longer than calculated, refinancing costs have exploded, and competitors from China are acting faster and more cheaply than expected.
The ownership structure is of particular importance: ZF is 93.8 percent owned by the Zeppelin Foundation, which is administered by the city of Friedrichshafen. Traditionally, 18 percent of the group's profits flow into the city budget. In loss-making years, this distribution is forfeited – with noticeable consequences for the city's finances. This entanglement of foundation capital, municipal interests, and industrial restructuring gives the ZF case a socio-economic dimension that extends far beyond the balance sheets.
Outlook: First signs of hope, but no end to the tunnel
The preliminary figures for 2025 allow for a cautiously more optimistic outlook. ZF more than doubled its adjusted free cash flow to over one billion euros – significantly above the target of 500 million euros. The adjusted EBIT margin exceeded the target range of 3.0 to 4.0 percent. Debt was reduced earlier than planned. CEO Miedreich spoke of an "important interim step" and emphasized that the company was on track – without, however, becoming complacent.
At the same time, the E-Division is showing initial signs of recovery: In the third quarter of 2025, the division returned to profitability for the first time in years. And the sale of the ADAS division to Harman, expected to be completed in the second half of 2026, will significantly reduce the debt burden once again.
Nevertheless, the situation remains fragile. ZF must repay more than two billion euros in debt annually between 2027 and 2030. Each refinancing round with a weak credit rating will be more expensive than the previous one. The planned sales stagnation of more than 38 billion euros for 2025 signals that growth as a lever for debt reduction is currently unavailable. The "Perform 2026" program therefore focuses entirely on cost reduction and efficiency – a strategy that promises stabilization but does not generate growth momentum.
ZF Friedrichshafen is at a historic crossroads. The company can survive – but only if its debt reduction strategy is consistently implemented, the market for electromobility doesn't take much longer to materialize, and Chinese competitors don't gain further market share. Three conditions, at least one or two of which are beyond the company's control. This is the true risk profile of a company that was once considered the epitome of Swabian engineering – and is now fighting for its very existence.
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