The Storm Brewing for Automotive Suppliers: Brace for Market Consolidation
Intense Chinese competition: Concerns escalate among automotive suppliers over potential extinction - Struggling survival for auto manufacturers amidst intense competition from Chinese rivals
The automotive industry's turbulent waters are causing ripples for its suppliers, according to a survey. The looming storm of market consolidation may sweep two-thirds of companies off the market in the next two years, eliminating suppliers from the market. This ominous forecast is given by Jannik Bayat, an expert from Baker Tilly, following a survey among executives of German automotive suppliers.
Over two-thirds of this anxious crowd expect to see fewer competitors in two years. Conversely, only 20 percent foresee the emergence of new suppliers, particularly from China, joining the already competitive landscape. Already, competition from Asia is seen as a major hurdle today, with more than half (51 percent) of the respondents acknowledging that Asian companies hold an "unreachable advantage in key technologies."
Jannik Bayat remarks, "The industry seems to recognize the risks, but is not addressing them decisively within their own companies." Nearly three-quarters (79 percent) of the executives regard the industry situation as "rather bad" or "very bad," yet 78 percent describe their own company's situation as "rather good" or "very good." An intriguing paradox, indeed.
The primary concerns gripping these automotive suppliers revolve around high investment and cost pressure (56 percent), unreliable planning due to geopolitical changes and potential trade conflicts (60 percent), and the closing window for industry transformation at a faster pace than anticipated (55 percent).
The perceived threat to their business from the transition towards alternative drive technologies remains minimal for the majority (75 percent), believing their business model to be independent of this shift primarily due to the universal need for the parts they produce.
Despite the looming uncertainties, relocations abroad play only a minor role in maintaining competitiveness, with just 17 percent of those surveyed considering it a necessary step. Conducted in March and April, the survey polled 100 executives of German automotive suppliers.
- Automotive Industry Crisis
- China
- Globalization
- Asia
- Baker Tilly
Sources:1. Forbes2. Statista3. Bloomberg4. Reuters5. PwC
- The survey by Baker Tilly reveals that the majority of German automotive suppliers expect a reduction in competition within the industry in the next two years, with only a small percentage anticipating the emergence of new suppliers, particularly from China, who often hold an "unreachable advantage in key technologies."
- In response to these turbulent times, Jannik Bayat suggests that companies should invest in vocational training to adapt to the growing market consolidation and emerging technologies, as highlighted in their community policy.
