Bosch GmbH plans to legally separate its automotive-parts business, as the world’s largest car supplier races to cut costs and respond to intensifying competition from China.

Bosch Mobility will be transferred out of the German parent company into a separate limited-liability company while remaining wholly owned by the Bosch group, it said Thursday.

The privately held group also plans to split out its Bosch Digital, Global Business Services and Global Real Estate operations, turning the existing entity primarily into a holding company that will also house the central research and advanced engineering team.

The reorganization marks a break for a company that grew from Robert Bosch’s 1886 Stuttgart workshop into an automotive giant built on spark plugs, fuel injection and brakes. As value shifts toward electric-vehicle batteries, software and artificial intelligence, Chinese suppliers including CATL and Huawei are gaining ground. Meanwhile, major European customers such as Volkswagen AG and Stellantis NV are cutting costs and struggling.

“We are operating in an increasingly challenging environment across our markets,” Chairman Christian Fischer said in a statement. “New competitors, particularly from Asia, are intensifying the competitive pressure.”The new structure will mean the car-parts business can “respond more quickly to market trends in the future and align its operations even more consistently with new customer needs,” he said.

Bosch currently has no plans to list or sell Mobility, or combine it with another auto supplier, a spokesman said.

The restructuring goes a step beyond an overhaul that began in 2024, when Bosch gave its sprawling Mobility business its own leadership team and greater responsibility for its operations. Bosch said at the time that the shift toward software-defined vehicles required it to serve customers faster and organize around areas including software, semiconductors and vehicle computers.

The pressure is particularly acute in auto parts. Mobility generated €55.8 billion ($65 billion) of sales last year, more than 60% of Bosch’s total, but its operating margin sank to 1.8% from 3.8% a year earlier. Bosch has said it needs to close an annual cost gap of about €2.5 billion to reach its profitability target.

The Mobility business accounts for more than half of the 413,000 people employed by the Bosch group at the end of 2025.

Chinese competition is helping reset benchmarks for both price and development speed. Huawei is investing heavily in smart-driving technology as it expands as a supplier of software, computing and cockpit systems, while CATL dominates global EV batteries. That leaves established suppliers needing to spend heavily on new technology, even as automakers squeeze them harder on price.

Bosch is already cutting deeply to close the gap. The company announced plans last year to eliminate about 13,000 jobs, largely in Mobility, after weakening orders and lower-than-expected demand for EVs intensified pressure on the business.

The problems have persisted this year. Mobility sales slipped slightly to €27.8 billion in the first half, and Bosch has warned that tough auto markets are likely to persist as it tries to make its largest business more competitive.