Summary of Key Points
At a time when its performance has been continuously declining and it faces immense pressure to transform, Bosch Group (the world's largest automotive parts supplier) has seen its first major change in leadership in 2022: the former chairman, Hartung, stepped down, and Fischer took over as the new chairman, with two additional vice chairmen appointed. Although Hartung completed significant acquisitions and increased investment in research and development during his tenure, Bosch's profits have plummeted in the past two years (with a profit margin of only 2% in 2025), far from the long-term goal of "at least 7%). Fischer's primary task is to balance the conflicting priorities of "cost reduction" and "transformation."
Why Now? A Necessary Choice Due to Performance Pressure and Critical Transformation Period
Bosch's leadership change is not accidental; it comes at two critical junctures:
1. Consecutive Years of Poor Performance: Profits dropped by 35% in 2024, and the situation worsened in 2025 (with a profit margin of just 2%), falling far short of the 7% target.
2. Entering a Critical Phase of Transformation: Bosch is transitioning from traditional fuel vehicle components to electric vehicles and autonomous driving technologies, which requires large-scale layoffs (22,000 employees to be laid off between 2024 and 2030, accounting for 5.3% of the total workforce) and significant business reorganization. A new leader is needed to tackle the challenging task of reducing costs while driving transformation.
Hartung's resignation was not forced; according to the press release, he voluntarily decided to pursue philanthropic work and entrepreneurship after completing a major acquisition worth $8 billion. However, the leadership change under pressure from shareholders indicates their hope that a new team can reverse the company's declining fortunes.
How Bad Is Bosch's Performance Really?
To put it simply:
- 2022-2023: Not So Bad: Sales increased from 88.2 billion euros to 91.6 billion euros, and profits rose from 3.8 billion euros to 4.8 billion euros, with a profit margin of 5.3% (although still below the target, it was on the rise).
- 2024: A Sharp Drop: Sales decreased slightly by 1.4% to 90.3 billion euros, but profits plummeted by more than a third to 3.1 billion euros, with a profit margin of 3.5%.
- 2025: Even Worse: Sales increased slightly to 91 billion euros, but profits dropped to just 1.7 billion euros, resulting in a profit margin of 2%. This means that for every 100 euros in sales, only 2 euros are left as net profit—almost at the brink of minimal profitability in manufacturing.
The main reason for the sharp decline in profits is the high cost of transformation: In 2025, Bosch set aside 2.7 to 3.1 billion euros as a "layoff reserve" to cover employee compensation and factory closures, which consumed a large portion of its profits.
Why Is Transformation So Costly?
Bosch's problems are not unique; the entire European automotive industry is facing difficulties:
- Cooling Demand for Electric Vehicles: Consumer interest in electric vehicles has waned in Europe and the United States (for example, due to reduced subsidies in the U.S. and economic challenges in Europe), leaving Bosch with a shrinking traditional fuel vehicle business while its electric vehicle division has not yet taken off.
- High Transformation Costs: Developing battery management systems and autonomous driving technologies, as well as closing old factories and laying off employees in traditional departments (such as engine components), all require significant investment.
- Competitors Laying Off Employees: Companies like Volkswagen, BMW, and Mercedes are also cutting staff to reduce costs, indicating that the entire European automotive industry is undergoing a period of austerity. Without cost cuts, survival may be at stake.
Bosch's plan to lay off 22,000 employees is aimed at freeing up funds for new initiatives, but it will inevitably result in poor short-term profits.
What Did Hartung Achieve During His Term?
Despite some successes, Hartung did not resolve the core issues:
- Major Acquisition: In 2022, Bosch acquired Johnson Controls and Hitachi's HVAC business for $8 billion, the largest acquisition in its history, to diversify into non-autonomous areas and seek new growth opportunities.
- Investment in R&D: He increased R&D spending to 8.6% and 8.7% of sales in 2024-2025 (higher than many tech companies), focusing on electric vehicles and autonomous driving technologies.
Unfortunately, these investments have not yet translated into profits, and the long-term goal of a 7% profit margin has been postponed to 2027, indicating that the transformation efforts are not yet yielding results.
Fischer's Critical Task: Balancing Cost Reduction and Transformation
Fischer faces two conflicting priorities:
1. Cost Reduction: With a profit margin of only 2%, Bosch must continue to cut costs (such as through layoffs and factory closures) to avoid losses.
2. Transformation: Stopping investment in electric vehicles and autonomous driving technologies could leave Bosch behind competitors if the market recovers later.
In short, Fischer needs to find a way to balance budget constraints with investment in the future—like trying to pay for children's tuition without running out of money.
In summary, Bosch's leadership change is a necessary response to ongoing pressure. Whether the new team can lead Bosch through the challenges of transformation depends on their ability to resolve the dilemma between cost reduction and innovation.
(The entire analysis is written in plain language, making it easy for non-financial professionals to understand.)