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German automotive supplier AE Group has made the decision to permanently close its factories in Thuringia and Hesse, meaning that approximately 650 workers will lose their jobs at the end of the year.

The company tried to find investors after filing for insolvency at the beginning of 2024, but none of them were able to offer a sustainable financing plan, while inquiries were sent to more than 160 addresses around the world, writes Fenix Magazin. In accordance with the agreement of the insolvency administrator, management, and the IG Metall union, workers will be provided with salary payments and compensation for up to six months, with the possibility of additional training to mitigate the consequences of job loss.

The main causes of the closure are not related to the company's technological level or its committed employees, but rather rising energy and raw material prices, as well as an uncertain investment environment in Germany, proved decisive.

AE Group had for decades been an important partner to major automotive companies, producing specialized components for transmissions and engines, and it employed more than 400 workers in Thuringia and over 130 in Hesse, along with administrative staff. In recent years, many suppliers in the automotive industry have faced the challenges of production digitalization, vehicle electrification, and growing global competitors, leading to restructuring and plant closures across Europe.

It is well known that the German automotive industry is one of the most important sectors in the country, employing millions of people and generating a significant share of total national exports. In the last decade, the transition toward more environmentally friendly technologies, along with rising production costs, has affected the reduction in the number of available jobs, especially among companies that fail to adapt to new market demands.

The automotive industry in Germany has traditionally had great importance for the broader European economy, connecting numerous small and medium-sized manufacturers, transport logistics, and innovation centers. The closure of plants such as those of AE Group most often has a long-term impact on local communities, not only in the context of employment, but also through a reduction in overall consumption and investment at the regional level.

In the period from 2020 to 2025, we witnessed numerous changes in the industry, including crises caused by the pandemic, disruptions in supply chains, as well as a sharp rise in raw material and energy prices. All these changes further complicated business operations for traditional suppliers, often bringing them to the brink of bankruptcy or liquidation.

Modernizing production in the automotive industry requires significant investments in digital tools, automation, and innovative solutions, which is a challenge for many companies that do not have enough capital or partners for long-term development. In such an environment, only the most flexible and innovative entrepreneurs survive, while numerous traditional plants close their doors.