Mathias Miedreich: The ZF boss wants to sell other parts of the company in order to reduce the automotive supplier’s debts. Photo: ZF [M]
Friedrichshafen. The new boss of the second-largest German auto supplier ZF, Mathias Miedreich, sees his company on the right track into the electric age after setbacks. “The cure that ZF needs is not rocket science,” said Miedreich in an interview with Handelsblatt. The priority is to increase cash flow in order to reduce debt.
The debt should also be reduced through further sales of areas. The wind power division is also an option for Miedreich. “If we determine that there is again a win-win-win situation like with driver assistance systems, i.e. that it fits technically, strategically and financially, then we will deal with the topic.” ZF is spinning off the division in order to be more flexible, Miedreich announced.
The renovator is not afraid of tough conclusions. Value adjustments for unprofitable orders would result in a book loss of 1.5 billion euros, said the ZF boss. Miedreich expects that ZF will have a fifth less sales after the restructuring.
Read the whole interview here:
Mr. Miedreich, 2025 was a career highlight for you with your promotion to the new ZF boss, but for the company it was a catastrophic year. First the chairman of the supervisory board was replaced, then the CEO had to leave. What is the real status of ZF? I have been at ZF for a year, initially as head of the car drive division and since October as CEO. From the outside it all looks more dramatic. But the cure ZF needs isn’t rocket science.
This is somewhat surprising, given the debt of almost eleven billion euros, annual interest payments of more than 600 million euros and therefore a huge additional burden that makes the transformation to electromobility more difficult. In a crisis like this, the priorities are simple. We are now doing everything we can to increase cash flow so we can pay off our debt. We achieved more than a billion in adjusted free cash flow in fiscal 2025, twice as much as expected, and an adjusted operating return of more than four percent. Our restructuring is taking effect, better than we thought months ago. The money tap has been turned off. Cash is no longer burned.
Are you really convinced that you have already shot ZF? I don’t want to be hasty. If we compare it to climbing Mount Everest, we are now at the first base camp. We’re still a long way from reaching the summit, but the ZF team has now trained so hard that they can make it to the summit in the next few years. As CEO and Chief Performance Officer, I lead the team. But the backpack has to be as light as possible if we want to make it. There are still a few stones that need to be removed.
ZF boss Mathias Miedreich: “We are now in the first base camp.” Photo: ZF
What do you mean by that specifically? We have adapted the orders for electromobility that we once successfully received to reality and found solutions with all customers. In some cases we were able to subsequently agree on different conditions. We have completely exited other projects that cannot achieve the expected profitability due to the slower ramp-up of e-mobility.
ZF had originally received orders worth over 30 billion euros for electromobility, many of them at prices that did not cover costs. So you’re now drawing a bitter conclusion? The special charges will lead to an accounting loss of around one and a half billion euros for 2025. They have nothing to do with our performance, but they lighten our backpack for the future. We are drawing a line under these projects – but we will of course remain active in drivetrains and electrification.
But the death zone above 7,000 meters is still ahead of you. Yes, but we are making a new start with the value adjustments for 2026. To stay in the picture: This will help us on the way to the summit.
But do you need additional oxygen in the thin mountain air? Our goal is to get to the top without oxygen, but with enough red blood cells.
Will the company continue to take legal action against the former board members who brought in the toxic orders? That is the responsibility of the supervisory board. I can’t comment on that.
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Your backpack will also be lighter because you will be giving up driver assistance systems (ADAS) for cars. What does that mean strategically? We have achieved a triple victory, technically, strategically and financially. Technically: Our intelligent cameras match the technology of the Samsung subsidiary Harman. Strategic: Our ADAS business is better suited to Samsung with its chip and software capabilities to meet the trend toward supercomputers in the latest generation of vehicles.
ZF can’t do this alone? We have a strong position in driver assistance systems. We also keep these for commercial vehicles. When it comes to cars, we have the aforementioned technological and strategic fit. And also the financial success: the business is valued at 1.5 billion euros. This will help us significantly with debt relief.
ZF is under severe pressure due to high levels of debt. How much relief will you get from the sale? Over a billion euros? The closing is expected to be in the second half of the year, then the money will flow and we can say more precisely, but the company value already gives a certain indication.
Vita Mathias Miedreich
Matthias Miedreich, 50, is a manager with an international profile. The Kempten native ran the battery recycler Umicore until May 2024. Before that, the business economist worked at the automotive suppliers Faurecia and Continental – mostly in connection with restructuring. From January 2025 he was responsible for the drive division at ZF. In October 2025 he replaced Holger Klein as ZF boss. The former 400-meter runner lives with his wife in Kressbronn, 15 kilometers from the ZF headquarters in Friedrichshafen.
With sales of 38 billion euros expected for 2025, ZF is the second largest German auto supplier behind Bosch. As a result of the takeovers of TRW and Wabco, the group is in debt of almost eleven billion euros and has to pay over 600 million euros in interest annually. Relief recently came from the sale of the driver assistance systems, valued at 1.5 billion euros. The group owns over 93.8 percent of the Zeppelin Foundation, which is dominated by the city of Friedrichshafen.
Are you relaxed now because of the sale of ADAS? I only feel relaxed after the group has been successfully restructured. But we were able to restore some of the basic trust in ZF. Our primary goal is debt relief. Organically, in 2025, with more than a billion in cash flow, we will have already reduced debts amounting to a low three-digit million amount. This means we are reducing debt earlier than planned. This is good and shows that the measures are working. But reducing debt with just our cash takes too long. That’s why we need additional divestments.
And why did the sale at ADAS go so quickly and the planned sale of the airbag business doesn’t work? The airbag business is significantly larger than ADAS. We won’t sell off our silverware. We remain committed to our owners to increase the value of the company. It is not possible to sell anything below the book value. The business is above average profitable. There may be better owners than ZF, but we are not under time pressure.
Why didn’t the employees at ADAS protest against the spin-off, as they did with their predecessor’s plans for the drive division? Because Samsung wants to grow the business strongly through investments and the 3,750 ZF employees in the ADAS division will thereby have good long-term prospects.
Not only ZF, but also Bosch, Schaeffler and Mahle are downsizing. Is the vision of the major automotive suppliers to become system providers in all areas a thing of the past? I believe that the entire industry has underestimated the complexity of the transformation. Everyone expected a continuous ramp-up of e-mobility. That too would have been challenging. The current fluctuations in demand could not be calculated.
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What is the consequence, especially for ZF? We have no choice but to focus on the areas in which we are really good.
And that would be? We are at the forefront of chassis, transmissions, commercial vehicle and industrial technology. Our after-market business is also very strong. We are currently still answering the question about future strategy.
If you decide to stop doing things or sell some areas: How big will ZF be in the future compared to the targeted 38 billion euros in 2025? We could have around 20 percent less sales. But we will also be faster and more profitable. And then be able to grow again in new fields.
Will wind power stay in the group? If we find that there is again a win-win-win situation like with driver assistance systems, i.e. it fits technically, strategically and financially, then we will deal with the topic.
ZF also produces gearboxes for wind turbines: The part of the company is one of the possible sales candidates. Photo: ZF
Are there any preparations already made? We are spinning off the business into an independent unit in order to be more flexible. That’s what it’s all about now. But we gain additional strategic options if the general conditions are right. What is important in everything is: Where do we want to go?
The crucial question is probably: What will happen to the drive division? The drive division with our gearboxes is a core competency that we are good at.
You said “gearboxes” – are you looking for a solution for the electric motors? Partnerships would be conceivable here. We will continue to consolidate for some time. But our employees and our owners also want to know: Where do we want to go? Where is our North Star?
Your predecessor wanted to sell the transmission business. Why do you see it differently? For a long time, hardly any transmissions were ordered. That has completely changed. We have agreed with the workforce that the car drive division will remain within the company. The lift from 2024 to 2025 through joint efforts with employees and the works council was immense. We are now facing a completely different decade.
Then you benefit from Donald Trump? I would say we benefit from a more realistic transition to electromobility including plug-in hybrids and other electrification – and yes, partly from the renaissance of the internal combustion engine, wherever it comes from.
How does the customs chaos affect you? We have around 30 plants in the USA, also thanks to the takeovers of TRW and Wabco. I was in the USA last week and met with our customers. Our contracts are usually designed in such a way that we do not bear the customs costs. But whoever takes on the tariffs: they ultimately contribute to rising prices in the USA – even if the tariffs have had little impact on us as a company in 2025.
Will it stay that way? Our customers have given us homework. We should manufacture more in the USA. This is going quite well because our plants in the USA are not fully utilized and we can bring at least some of the production there without having to build new plants.
Did any specific volumes of work go from Germany to the USA? Fortunately, the USA and EU have reached a customs agreement. That is why there were not the massive relocations that had been feared. But it’s clear: value chains are currently regionalizing. In 2026 we will have a significantly higher level of added value in the USA.
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And in China? I’m optimistic about China. We have a lot of new customers there. They don’t actually want to build cars themselves, but rather sell their AI and operating system.
That’s where you come into play. But the margins are significantly higher with software, and you then only make “heavy metal” with a correspondingly high use of raw materials and lower margins. We have long been doing more than just hardware. It’s true: a car needs a lot of actuators to be able to drive around curves…
… i.e. systems for steering, damping and braking … we have this know-how and will keep it. Because no pure software manufacturer has that. In the end it’s about the interfaces. It is the responsibility of IT companies to continue to develop high-performance computers. We are responsible for the specific chassis intelligence. Hardware included.
How does ZF keep the balance worldwide? That’s difficult. The day will come when only electric cars will be built. But it will come later than last thought – and that will vary from region to region. Overall, it will be exciting to see what happens in markets where the number of cars per inhabitant is not yet that high. Will they buy electric cars right away? I think there will be intermediate steps because the charging infrastructure is often not yet available.
And Europe? The latest EU proposals do not provide the desired degrees of freedom. This is a huge disappointment for us and the industry as a whole. We need more flexibility for a successful transformation. The biggest problem remains the demand side, the lack of capacity utilization of the plants and the associated costs.
That’s why you want to cut 14,000 jobs in Germany by the end of 2028. The global strategy for auto suppliers no longer exists. This has to do with the current geopolitical upheavals, but especially with customer requirements. The Americans want V-8 engines, the Chinese want more electric cars and the Germans want plug-in hybrids. We have to offer the right products in each region and cannot be present with the full range everywhere. Ultimately, it’s about where we offer customers the greatest added value.
What will be left of ZF now? Chassis technology, electrified transmissions as well as commercial vehicle and industrial technology and our after-market business.
That’s not much different than your predecessor? What will be important is which products and market segments we can still enter. However, the question only arises after the restructuring has taken place.
But you’re playing for time. We’re thinking about it, but when it comes to such important strategic decisions, we only talk about it internally and then when it’s viable. I stand for implementation, not for announcements. We’ll take the time we need.
And the workforce will follow you? I see the employees’ self-confidence increasing. We walk straighter again. This is very important to me.
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What are you afraid of this year? I’m afraid that when the numbers get better again, the company will fall into satisfaction mode too quickly. The first successes are initially just a delicate plant.
Mr. Miedreich, thank you very much for the interview.