Crisis in the auto industry is coming to Portugal (and so are the layoffs)
The big car manufacturers in Portugal, such as Stellantis, have escaped the waves of job cuts in the sector, but the French chamber of commerce guarantees that the crisis will also reach the country.
The European car industry is facing a crisis that has forced the major manufacturers to go ahead with restructuring programmes and lay off thousands of workers. For now, Portugal has been spared from this scenario, with 2024 being the second best year ever for national car production. Nevertheless, “the crisis is going to hit Portugal” and with it the lay-offs, admits the Portuguese-French Chamber of Commerce and Industry (CCILF).
“The crisis [in the automotive sector] in France and Germany is going to spread to Portugal”, acknowledges Laurent Marionnet, director-general of the French chamber of commerce, in comments to ECO. He is “worried” about the situation in the sector and says he doesn’t know what will happen in the country.
Although, so far, there has been no news of layoffs by the major car manufacturers in Portugal, including two French companies — Stellantis and Renault — and investments continue to flow into the country, with activity slowing down abroad, the impact on the domestic market is practically inevitable.
The car market in Germany and France is falling and production in Portugal will fall too.
“The car market in Germany and France is falling and production in Portugal will fall too”, says Laurent Marionnet. Asked if the layoffs will also affect Portugal, he replies: “Yes, yes”. The director-general of the French chamber of commerce emphasises the rapid changes taking place in the automotive sector: “The car market is changing completely, with the Chinese coming in, and we don’t know how European production is going to evolve”.
Faced with this new dynamic, marked by greater competitiveness and the transition to electric cars, Laurent Marionnet underlines that “the Portuguese car industry is already changing and making the transformation to electric motors”, as is the case with the two French companies in the domestic market.
In the case of Stellantis, which has a factory in Mangualde, the owner of brands such as Peugeot and Citröen started producing electric cars in Portugal last year after an investment of 119 million euros, obtained through one of the mobilising agendas for business innovation. The company, which until last December was led by Portuguese Carlos Tavares, started producing 100% electric passenger and light commercial models at the beginning of October.
Renault, with a production plant in Cacia, is also “already working on a new electric motor solution”, says the head of the French chamber.
2024 was a “dark” year for the major car manufacturers, with companies in the sector announcing plant closures, layoffs and restructuring plans to cope with the slowdown in orders. France’s Stellantis, as well as Volkswagen, which has Autoeuropa in Portugal and is the country’s largest exporter, admitted to closing factories and other cost-cutting measures, leaving Portugal out of the layoffs.
Although the crisis in the automotive sector is not yet having a direct impact on these large international groups, companies that produce for these multinationals and component manufacturers are already feeling the crisis.
Only at the end of last year, it became known that Coindu was going to close its factory in Arcos de Valdevez and lay off 350 people; the Spanish company Cablerías, another supplier based in Alto Minho, filed for insolvency in Portugal, threatening 250 jobs in Valença; and the Catalan company Ficosa decided to put the 900 workers at its factory in Maia on lay-off due to the drop in orders. These are the well-known cases, but there are more smaller companies in difficulty.
More than 500 jobs at Autoeuropa’s suppliers are also at risk. Vanpro and Tenneco will not supply components for the new model that will start being produced at Volkswagen’s Palmela facility at the end of 2025, with the car manufacturer transferring this production to a German company, in which it controls 50% of the capital.
The crisis in the European automotive sector and the challenging economic environment in Europe, especially in the two largest European economies — France and Germany — are also already having an impact on Portuguese exports. The entire manufacturing industry, especially sectors such as textiles and clothing, footwear, ceramics and glass, wood and furniture, metalworking and moulds, are already feeling a slowdown in foreign sales.
Despite this challenging environment, Laurent Marionnet says that “the French still want to invest in Portugal” and the automotive sector continues to be one of the most important for what is the second largest foreign investor in Portugal and one of the largest employers. He points out that, in the automotive sector, the French “who are already in Portugal are still investing a lot, transforming their production and looking for French partners”.