German automotive components manufacturer Mahle is preparing for what its leadership has described as a "landmark year," as the company navigates a challenging global business environment marked by economic headwinds, trade frictions, and structural shifts in the mobility sector.

According to Arnd Franz, Chairman and Chief Executive Officer of Mahle, the business environment will remain demanding, or even difficult, for the foreseeable future. The transformation of the industry - and of Mahle itself - will be driven largely by economic policy and regulatory decisions. He stated, "Only when the political and economic conditions have durably improved will Mahle be able to create employment again. 2025 will be a landmark year."

Franz further noted that limited dynamism is expected in the market in 2025, with production of passenger cars and light commercial vehicles in Europe and North America projected to continue shrinking. He warned that United States import tariffs will significantly burden vehicle production in Europe, Japan, and South Korea. Slight growth, however, is anticipated in China and India.

Despite the cautious tone, Mahle is continuing to advance its long-term transformation strategy, Mahle 2030+, which has now entered its second phase: Business Excellence. This phase is centred on improving profitability, driving process optimisation, and reinforcing operational discipline.

Franz affirmed the company's strategic focus, stating, "We will keep our foot on the gas pedal for the implementation of our group strategy. We are striving for sales growth with sustainable profitability as our top priority."

China remains essential

China continues to play a central role in Mahle's global growth strategy, with the company describing the country as "essential" to both innovation and market expansion. In the face of global challenges, Franz highlighted China's unique advantages in scale, speed, and technological development, particularly in the field of new energy vehicles.

He commented, "An important market where we are determined to continue our growth is China. China is simply essential."

Mahle currently employs approximately 7,000 individuals across more than 30 facilities in China, including 500 engineers working at two advanced technology centres. The company develops and manufactures components in China not only for the domestic market, but also for global supply chains.

Regarding new energy vehicles, Franz reported that Chinese original equipment manufacturers (OEMs) have shown increased interest in Mahle's thermal management modules, air conditioning systems, electric compressors, and charging electronics. He also disclosed that the company recently secured a contract for its DC/DC converter, which is used in electric vehicles, from an international car manufacturer operating in China.

Franz emphasised that China's capacity for rapid innovation and production scale renders it an invaluable environment for knowledge acquisition and operational agility. "China is important for us because of its size and its speed. If you want to bring technology onto the roads fast, China is the right place. China is our boot camp," he remarked.

He further stated that the company's experience in China - especially in agile development and efficient manufacturing - is already delivering benefits to operations in other regions. "What we learn and train in China, such as significantly faster and more efficient development and production processes, will not only make us strong in China. It will also bring benefits in other regions of the world."

Europe's BEV transition

As Europe advances towards its planned ban on internal combustion engines by 2035, Mahle has voiced concerns regarding the potential industrial and social consequences of a battery-only approach. Franz warned that the current trajectory poses a threat to hundreds of thousands of jobs and called for urgent regulatory reform.

He explained, "In view of the ban on internal combustion engines from 2035 onwards, our industry faces massive challenges. In Europe, two-thirds of jobs within the group depend on the internal combustion engine. This technology offers five times as many jobs as e-mobility."

Data from the European Association of Automotive Suppliers (CLEPA) indicate that nearly 56,000 jobs have already been lost across Europe in the past four years due to the ongoing transition in powertrain technologies. CLEPA estimates that this figure could rise to 275,000 job losses by 2040 if battery-electric vehicles (BEVs) become the sole legally acceptable option.

Franz reaffirmed Mahle's commitment to reducing CO₂ emissions but stressed that the transition must be managed in a way that preserves industrial capacity and employment. He advocated for a technology-neutral approach that includes hybrids and renewable fuels alongside BEVs.

He stated, "We must deal honestly with the question of how the path to carbon neutrality is to be accomplished - not only in terms of climate protection, but also with respect to employment and social policy."

Franz welcomed the European Commission's decision to bring forward the review of CO₂ regulations, originally scheduled for 2026, considering it a vital opportunity to introduce more inclusive solutions.

He added, "The EU Commission must specifically state how CO₂ requirements can be shaped in a technology-neutral way. No other market in the world has opted solely for battery-electric vehicles - not even the largest market for BEVs, China. Europe must abandon its narrow 'battery-only' approach, as this will lead to an industrial and climate policy cul-de-sac." He further stressed that consumer preference should determine the market's direction and that policymakers ought to support, rather than restrict, that choice.

Restoring Europe's competitiveness

In addition to regulatory concerns, Mahle is also contending with the effects of recent United States import tariffs, which Franz described as detrimental to global automotive supply chains.

"As a globally active company committed to free and fair trade, this trade policy is difficult to understand. Tariffs are fatal for supply chains and will result in additional costs and, ultimately, higher consumer prices in the U.S.," he commented.

Franz called on political leaders to pursue sustainable trade policies and urged greater European unity and economic strength to confront current global challenges.

Pillars of growth

As Mahle continues to adapt to a rapidly evolving mobility landscape, the company is placing significant emphasis on two key areas of growth: its Lifecycle and Mobility Services business, and a broadening non-automotive portfolio. According to Franz, both pillars are expected to play a critical role in ensuring long-term profitability and strategic diversification.

"A further pillar of growth and earnings is our Lifecycle and Mobility Business Unit. We are pursuing ambitious sales and profitability targets in our business with spare parts and services," he said.

Traditionally recognised for automotive components such as filters and piston rings, Mahle has evolved into a comprehensive provider of mobility solutions. The company now offers a wide range of diagnostic technologies, workshop equipment, and services that support both passenger and commercial vehicles throughout their lifecycle. Franz noted that this transformation aligns with wider mobility trends, including the growth of fleet-based transport, urban mobility services, digital connectivity, and diversified powertrains.

He added, "Mahle will benefit from these trends and develop digital offerings that link drivers and fleet operators directly with service partners - workshops, charging infrastructure providers, parking services, and insurers."

Non-automotive business

Franz also underscored the company's increasing focus on non-automotive applications - a sector he described as possessing "significant untapped potential." Mahle intends to achieve above-average growth in segments such as energy and infrastructure, leisure and logistics, industrial equipment, and special vehicles.

"We intend to focus more strongly on our potential in non-automotive business and achieve above-average growth in these segments," he said.

One of Mahle's most notable achievements in this area has been within the e-bike sector, where its SmartBike Systems now power more than 60 cycling brands across various segments. The company also maintains active engagements in rail, marine, defence, and industrial thermal systems.

In 2024, Mahle's revenue from non-automotive business reached EUR 700 million (US$ 795 million), with Franz projecting that the figure will surpass EUR 1 billion within five years. He concluded by stating that the company is exploring further opportunities in this space. "The potential is significantly greater. Therefore, we are taking a close look at this business field," he said.