Facing mounting challenges in the global auto industry, ZF Friedrichshafen AG is pushing ahead with its company-wide transformation. The group is adjusting its factory output to reflect shifting market demands while continuing to revamp its internal structure.
Despite falling sales, the company’s efforts to improve its operations are starting to show results. In the first half of 2025, ZF reported a rise in operating profit to €874 million, up from €780 million the previous year. This brought its operating margin to 4.4%, up from 3.5%.
Revenue, however, dropped sharply to €19.7 billion, compared to €22 billion in 2024. The decline was mostly due to the transfer of ZF’s axle assembly unit into a new joint venture, ZF Foxconn Chassis Modules GmbH.
“We are going through the most far-reaching changes in our history,” said CEO Dr Holger Klein in Friedrichshafen. “Our focus is on staying competitive and securing our future, even if that means making tough choices.”
He acknowledged the burden placed on employees but insisted the company’s actions are necessary. Sluggish electric vehicle demand, flat global car production, and international trade uncertainties continue to strain the business. Still, ZF believes its cost-cutting and reorganization are producing tangible benefits.
ZF is narrowing its focus to areas with strong long-term potential, including Chassis Solutions, Commercial Vehicles, and Industrial Technology. Meanwhile, less promising projects—like autonomous shuttle systems—are being phased out.
To improve efficiency, ZF is combining its vehicle performance programs into one framework, expanding it across the company, and revisiting its organizational structure. Each product line is under review to ensure it meets financial expectations, which may lead to further portfolio changes.
ZF is looking at potential partnerships for its Electronics and Advanced Driver Assistance Systems (ADAS) business to support future growth. At the same time, a dedicated turnaround plan is underway for its Electrified Powertrain division, focusing on aligning staffing levels and deciding which products will be built in-house or sourced externally. “These steps won’t be easy,” said Mr Klein, “but we aim to handle the process with care and responsibility.”
The company has completed the spin-off of ZF Lifetec, formerly its Passive Safety Systems unit. While market conditions are not currently ideal for a public listing or a sale, ZF continues to evaluate its strategic options.
In 2024, ZF announced it would begin reducing headcount and reorganizing its German plant network. By mid-2025, the global workforce had dropped by over 2%, to 157,845. In Germany, staff numbers were down 2.6% to just over 50,000.
Overall, ZF has eliminated about 11,200 jobs since January 2024, including 5,700 in Germany. Another 4,700 employees have opted for partial or full retirement. While the company aims to manage cuts responsibly, further job losses in some areas remain a possibility.
Despite a decline in revenue, ZF boosted operating profits and cash flow during the first half of the year. Free cash flow reached €465 million, up from a negative figure of €494 million in the same period of 2024. CFO Michael Frick said the improvement reflects better cost management and targeted investment. Net debt was €10.5 billion at the end of June, and ZF maintained strong liquidity reserves of around €8 billion, including an untapped credit line of €3.5 billion.
Earlier this year, ZF placed a €1.25 billion bond with a five-year term. The offering was well received by investors, underlining market confidence in the company’s strategy. “The new financing provides stability and gives us time to stay focused on long-term goals,” said Mr Frick.
ZF will be among the exhibitors at the upcoming IAA Mobility show in Munich (Sept 9–12), highlighting its Chassis 2.0 technology, which uses smart actuators and software-based systems for steering and braking. Other innovations on display will include the SELECT e-drive platform for electric powertrains, new range-extender systems for EVs, and upgrades to ZF’s eight-speed automatic transmission.
