navigate the automotive revolution.
5 bold steps HR leaders in the automotive industry can take now to drive their organizations into the future
The automotive industry is at a crossroads, undergoing a radical transformation driven by new technologies, shifting geopolitical landscapes and a profound redefinition of its workforce. For leaders in this dynamic sector, understanding these changes and strategically adapting talent acquisition and development are not just priorities — they are imperatives for sustained success.
a shifting manufacturing and supply chain map
Production overcapacity has long been an issue for several car factories in Europe and North America. This problem is likely to worsen due to the U.S. and E.U.'s recent increase in import tariffs on Chinese EVs. As a result, Chinese automakers may establish factories in Europe, the U.S., or free-trade partner countries, like Morocco or Turkey, to maintain competitive pricing.
These shifts will fundamentally redefine the automotive manufacturing map of the U.S. and Europe, with low-cost countries (LCCs) emerging as key hubs for production capacity and supply chains. These LCCs include nations with significantly lower manufacturing and production costs, such as Mexico, India, China, Eastern European countries and Thailand. For example:
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Mexico is a standout due to its lower labor costs and proximity to the United States.
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In APAC, Thailand is a major production hub for Japanese automakers
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Vietnam is an emerging, cost-competitive alternative for auto parts and electronics.
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Indonesia is a growing automotive manufacturing center for both domestic and export markets.
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Eastern European countries like Hungary, Poland and Czechia are attractive to the European market because of their lower costs and proximity to major hubs.
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Further complicating matters is geopolitical uncertainty and deglobalization. The U.S. and E.U.'s tariffs on Chinese EVs are accelerating a nearshoring momentum that began with pandemic-era supply chain disruptions. More than 81% of senior executives plan to move their supply chains closer to home, though only 2% have completed these localization plans .This necessitates a delicate balance between managing production localization costs and software innovation.
the evolving automotive workforce: challenges and new opportunities
The impact of these shifts on the workforce is profound. The automotive industry is transitioning from traditional manufacturing toward rapid design processes pioneered in consumer electronics. This transformation requires integrating advanced technologies and aligning production processes, as well as redefining business models, talent strategies and customer experiences.
A significant challenge looms: The automotive original equipment manufacturers (OEMs) workforce is estimated to shrink by as much as 50% in the future. This is largely because EVs have fewer working parts, and more assembly is completed at the supplier level. Despite potential layoffs, the industry's talent acquisition challenges are far from over. The nature of talent needs is rapidly evolving, with a dramatic shift from hardware to software.
increased demand for emerging skills
According to McKinsey, most automotive leaders worldwide believe that software enabling AI prediction, decision-making (76%) and perception (72%) are the most critical technologies. Connected cars, which represent 72% of passenger vehicles today, are a key part of the internet of things (IoT) and can send and receive data, communicating with other software systems. This connectivity forms the foundation for sophisticated autonomous vehicles and new ownership models. Additionally, 70% of leaders believe AI software will create new monetization models for the industry.
Even as OEM workforce demands shift, new jobs are emerging. The rapid growth of EV charging infrastructure alone is estimated to create up to 160,000 new jobs in the U.S. by 2032 — based on research from the International Council on Clean Transportation. These roles will primarily include skilled trades like electrical installation, maintenance, charger assembly and construction. Localization of new supply chains will also continue to drive job growth.
talent imperatives for automotive leaders
Research from the World Economic Forum (WEF) 2025 Future of Jobs Report uncovers additional trends that will impact workforce strategy for employers in the automotive sector in 2025 and beyond. In this transformative era, several imperatives stand out for automotive leaders:
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Upskilling, reskilling and talent attraction: These are top priorities, particularly as industry leaders seek new value creation opportunities. Upskilling and transitioning existing staff from declining areas to growing job roles is an untapped opportunity, with the automotive,aerospace, electronics and real estate sectors prioritizing redeployment transitions as one of their top three workforce strategies by 2030.
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Embracing green skills: The industrial sector, including automotive, anticipates significant organizational transformation due to decarbonization efforts, with 71% of automotive employers expecting carbon emissions reductions to transform their organizations. As a result, many will require workers to be upskilled and reskilled for alternative jobs. Prioritizing green skilling will be essential to capitalize on green transition opportunities.
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Talent retention: 72% of employers in the automotive industry highlight talent retention as a key priority. Training programs are crucial, with enhanced productivity (77%) and improved competitiveness (70%) being the most common expected outcomes.
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Cross-industry collaboration in training: While cofunding across industries is generally underutilized, WEF expects it will be most prevalent in the automotive and aerospace industries, underscoring the importance of cross-industry collaboration for re- and upskilling.
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5 bold steps HR leaders in the automotive industry can take now
To effectively respond to these shifts, HR leaders must embrace transformative strategies:
Proactively reskill and upskill the existing workforce at scale.
With the OEM workforce expected to shrink, and demand for new skills growing, strategic reskilling and upskilling programs are paramount. This is an untapped opportunity that will not only help existing staff remain relevant, but also ensure your organization always has access to the skills it needs to compete and grow.Redefine talent attraction beyond traditional automotive pools.
Look beyond traditional automotive recruitment channels to attract highly qualified software engineers, AI specialists, cybersecurity experts and green skills from other industries, like consumer electronics and IT.Seek opportunities for cross-industry training collaboration.
With cofunding for training expected to grow in the automotive industry, employers can partner with educational institutions and other industries to build necessary skill sets.Prioritize talent retention as a core strategic outcome of training programs.
With 72% of automotive employers highlighting talent retention as a key priority, training programs must be explicitly designed to not only enhance productivity but also to retain valuable talent.Develop dynamic workforce planning models that can adapt to market shifts.
Move away from static workforce plans to agile models that can quickly respond to changing supply chain locations, new market entries and evolving trade policies, including those impacted by deglobalization and localization trends.
partnering for success in the new automotive era
The automotive industry is navigating a period of unprecedented change, where technological innovation, geopolitical shifts and evolving consumer demands converge. How will you build an agile workforce, acquire specialized skills and foster a culture of continuous learning to ensure your organization can continue to lead as it takes on each new bend in the road? With a proactive and adaptive talent strategy, your company will not only weather this revolution, but emerge stronger, more innovative and better positioned for the future of mobility.