Germany's Top Auto Parts Maker to Spend 102% of Operating Profit on Interest in 2025

A recently disclosed industry research report reveals that in 2025, leading German automotive suppliers will see their average interest expenses rise for the fourth consecutive year, reaching 102% of their average operating profit. The report was prepared by Strategy&, PwC’s German consulting arm, and is scheduled for release in late September. It surveyed major companies including ZF Friedrichshafen, Continental AG, and Schaeffler Group. According to the data, ZF’s net debt surged from €279 million in 2014 to €10.5 billion in 2024. In 2024, its pre-adjustment EBIT stood at €210 million, while interest expenses reached €810 million. Although ZF’s net debt declined slightly by the first half of 2026, its leverage ratio remains above the industry’s safe range. Continental and Schaeffler similarly face elevated net debt levels and high leverage ratios. The report attributes mounting debt pressures on German auto suppliers to several factors: highly leveraged acquisitions, shrinking profitability due to the transition toward electrification, substantial capital outlays for electrification and intelligent mobility transformation, narrowing profit margins as automaker customers’ earnings decline, and widening cost gaps with Chinese competitors. To address this crisis, affected companies are implementing cost-cutting measures such as divesting non-core or even high-quality assets, offering early retirement packages, workforce reductions, and exploring new business areas like defense.