Automotive suppliers Top 100 Supplier Study: Insights and Challenges

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Berylls Strategy Advisors GmbH

FAULHABER Drive Systems

Wuxi InfiMotion Technology Co., Ltd.

Berylls has published its 13th consecutive annual Top 100 Supplier Study, highlighting the developments and challenges faced by the world's largest automotive suppliers. The study reveals positive news as the industry has increased both revenues and margins compared to the previous year. However, considering 2022 was a particularly challenging year, this slight increase isn't cause for major celebration.

With the TOP 100 Suppliers Study 2024, Berylls is highlighting the developments and challenges of the world's 100 largest automotive suppliers for the thirteenth consecutive year. Among the seemingly positive news is that the industry was able to increase both revenues and margins across the entire supply chain compared to the previous year. However, the comparison year 2022 was extremely poor for the industry, so a slight increase is no cause for celebration. The ten largest automotive manufacturers surpassed the growth of the suppliers, with a revenue increase of 8.1% to €1,770 billion, while suppliers initiated numerous performance programs and laid off thousands of employees last year.

As in previous years, OEMs and suppliers show a significant margin disparity. Automakers achieved an average margin of 8.5%, setting a new record as in the past two TOP 100 studies, while suppliers reached only 5.9%, merely returning to pre-COVID levels. Last year, the industry increased its revenue to a new record of €1.135 billion. The primary growth driver was the increased demand for new vehicles in North America and Europe. However, suppliers were rarely able to fully pass on the continued high producer prices for energy and raw materials to the OEMs.

Within the top 10 group of the largest supplier companies, there has been significant movement in recent years. Notably, Continental has experienced a continuous decline. Although the company increased both revenue and margin in 2023, it has dropped one rank each of the last two years, now sitting at fifth place. In 2019, Continental was in the second position, just behind Bosch. In 2023, the Korean supplier Hyundai Mobis has overtaken Continental. The only constant in the top 10 is Bosch, which remains the leader and has increased its lead over Denso. ZF holds the third position once again. China is represented by the major battery manufacturer CATL, which remains in seventh place as it was last year, unable to significantly close the gap with Magna, which is in sixth place.

Market Shifts and Industry Dynamics

Without a doubt, the rapid development of the Chinese supplier industry has been an unpredictable trend, as Dr. Jan Dannenberg, the initiator of the supplier study and a partner at Berylls by AlixPartners, points out: “For more than ten years, the TOP 100 has provided a picture of the supplier industry that reflects longer-term developments. Thirteen years ago, it was unthinkable that Chinese companies would gain such significant importance in such a short time.”

However, the number of Chinese suppliers within the TOP 100 is not growing rapidly. In the 2023 ranking, eight suppliers from China made it to the TOP 100, and this year a ninth company has joined: Sailun, a tire manufacturer. There is significant dynamism not only in the top group of the TOP 100 but also in the ranks below. Since 2019, 13 new suppliers have entered the TOP 100, 62 percent of them from the Asian region, slowly but steadily shifting market shares in favor of Asians, especially Koreans and Chinese. Looking back at the first Berylls supplier study, it becomes clear how much the industry has changed. A remarkable 30 percent of the companies that are in the TOP 100 today (such as CATL, Infineon, LG, Renesas, Samsung) were not included in the initial year. The numbers of battery, semiconductor, and electronics manufacturers have almost exploded. Changes have been less pronounced in traditional market areas such as steel parts, steering, brakes, or tires.

Although the dominance of German and Japanese suppliers remains unbroken, their significance is eroding. In recent years, the segment of Japanese companies has lost about five percent of the global supplier market, while the German group has shrunk by two percent. Nevertheless, together they still account for around 40 percent of the global supplier industry.

Global Supplier Landscape

However, as the importance of product categories shifts towards the battery and semiconductor industries, there is a risk that the position of German companies will come under further pressure, as they are barely represented in this particularly promising growth market. In contrast, Chinese companies are on a strong growth path in this area. Accordingly, Berylls experts expect a significantly different composition of the TOP 100 by 2030. "By 2030, we already see 17 Chinese companies within the TOP 100, only 18 years after Weichai Power was the first company to break into this elite group. Additionally, it is likely that CATL will hold the top spot in our ranking by 2030," predicts Dr. Alexander Timmer, Partner at Berylls by AlixPartners.

The good numbers that underlie the current ranking, however, mask a negative trend. On average, the revenue-weighted margin of the top 100 increased by 0.7 percentage points to 5.9 percent, but this also means that 50 percent of companies fall below this margin. This is particularly concerning for the German SMEs. Dr. Jürgen Simon, Associate Partner at Berylls by AlixPartners, says: "We see that the margin for mid-sized suppliers in Germany often stands at only four to 4.5 percent or even lower. This makes the urgently needed transformation of companies hardly feasible."

Geopolitical and Economic Challenges

These developments coincide with an increasingly difficult-to-assess market environment. Protectionism, import restrictions, and tariffs between Europe, China, and the USA will dominate the industry this year. As a result, Berylls experts anticipate higher localization of production and increased autonomy within individual world regions. In traditional product categories (such as seats, interior, metal processing, chassis, etc.), cost leadership is becoming more crucial than ever. This implies that value creation in Germany is likely to further diminish, potentially leading to additional bankruptcies. Moreover, a significant increase in global car registration numbers is unlikely, and short-term recovery in producer prices cannot be expected.. 

Future Outlook

With the outcome of the presidential elections in the USA at the end of the year, an important decision-making process will take place that also affects the automotive supply industry. Depending on the result, the effects of protectionism could further intensify.
 Suppliers that have not yet focused on electric drives currently have an advantage, as BEV (Battery Electric Vehicle) sales in Europe are expected to pick up only at the end of this year or even at the beginning of 2025. Despite some small bright spots in the supplier study of 2024, it is evident that the situation for the industry continues to be challenging.