How automotive suppliers are faring around the world

Stage Formation How Automotive Suppliers are Faring Around the World

2025-05-09 Source: dpa | Translated by AI 2 min Reading Time

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According to a Roland Berger study, the return on sales of automotive suppliers worldwide is falling. In addition, five trends are influencing the industry ...

A recent study sheds light on the business of global automotive suppliers. Find out here how the industry is doing ...(Image: Billiardos) — A recent study sheds light on the business of global automotive suppliers. Find out here how the industry is doing ...
(Image: Billiardos)

According to a study (Global Automotive Supplier) by Roland Berger and Lazard, in which 600 automotive suppliers were surveyed, the following picture emerged: The market situation for the global automotive supplier industry remains difficult, it says. Stagnating production volumes, geopolitical uncertainty, increasing competition and rising cost pressure are likely to push companies' profitability (for 2024) down to an average of just 4.7% (EBIT margin). After the previous year, this is another contraction effect, according to the report. Against this backdrop, Chinese suppliers are still performing comparatively well at 5.7%. The EBIT margins of European (3.6 percent) and South Korean (3.4 percent) suppliers are below the industry average, according to the report. Weaker demand in the second half of 2024 and difficult price negotiations with car manufacturers are obviously weighing on business. As their profitability is still higher but has also fallen, suppliers' margins are likely to remain under pressure in the coming years. Experts describe the situation as a stagnation. This is because the industry is stagnating, but at the same time has to manage important transformations for the future. Over 40 percent of the 25 largest automotive suppliers are now classified as "non-investment grade".

These five Trends are Shaping the Automotive Supply Industry:

Firstly, global production volumes are stagnating, resulting in overcapacity, with Europe under the most pressure. At the same time, China and South Asia are the main drivers of (albeit modest) global automotive growth;
Secondly, the switch to electric vehicles is progressing more slowly than planned in Europe and North America. As a result, economies of scale are not materializing as expected;
Thirdly, the trend towards software-defined vehicles with more and more assistance and connectivity functions is a great opportunity - but not for all suppliers! This is because software costs are rising;
Fourthly, competition between OEMs is intensifying worldwide! New players are entering the market, especially for electric cars. This increases the cost pressure;
Fifthly, geopolitical developments are creating a high level of uncertainty and are changing global trade and supply chains with new tariffs and subsidies.

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