Struggling Days for German Auto Suppliers: Asian Companies Surge Ahead
Asian automotive manufacturers pose an unrelenting threat to their competitors, according to car suppliers' forewarnings.
The automotive industry is facing a stark reality. Its suppliers are feeling the heat, and it's all because they're being outpaced by Asian competitors, a survey reveals. Nearly half of these companies fear they won't survive the competitive landscape in the near future.
Two-thirds of the surveyed German auto suppliers anticipate a market consolidation within the next two years. This means providers might vanish, as per the findings of a survey conducted by the firm Baker Tilly among these German automotive suppliers.
67 percent of the respondents predict having fewer competitors in two years. Conversely, only 20 percent expect new providers, especially from China, to enter the market. The formidable competition from Asia is already viewed as the greatest challenge, with over half of the surveyed suppliers (51 percent) attributing the Asian companies an "uncatchable lead" in cutting-edge technologies.
Unideal Industry Outlook vs. Positive Self-Assessment
The industry's overall perception is incredibly pessimistic: 79 percent deem it "fairly poor" or "very poor." However, those surveyed were far more hopeful about their own company, with 78 percent rating their current situation as "fairly good" or "very good." "The perception is striking," remarks Baker-Tilly expert Jannik Bayat. "The industry recognizes the risks but isn't tackling them decisively within their organizations."
High investment and cost pressure were identified as major obstacles by 56 percent of the respondents. Adding to the woes, 60 percent complained about unreliable planning due to geopolitical shifts and potential trade conflicts. Although 55 percent have observed that the transformation window for the industry is closing faster than anticipated, only a minority perceive this as a threat to their own businesses.
Future-Proof Even Without an IC Engine
Surprisingly, three-quarters of the respondents believe that their business model remains largely unaffected by the shift in drive technologies. This confidence stems from the fact that the parts they supply are crucial for both electric and internal combustion engine models.
Relocations abroad are seldom considered a necessity to secure competitiveness, as only 17 percent of the surveyed suppliers think it's essential for their companies. The study sampled 100 executives of German automotive suppliers in March and April.
- Automotive Industry
- Asian Automotive Industry
- China
- Chinese Automakers
- Competitive Landscape
Enrichment Data:
- German suppliers grapple with higher vehicle development costs and complexity than their Asian counterparts.
- German companies often struggle with slow decision-making processes, a cumbersome meeting culture, and steep hierarchies.
- Chinese companies follow a more agile "ship fast, fix later" approach in comparison to the perfectionist German companies.
- Asian companies, especially those based in China, are capitalizing on key technologies such as electric vehicles (EVs) and NEV technology, resulting in competitive prices and innovative features.
- Greater integration with local suppliers in China contributes to streamlined production and lower costs.
- Chinese companies are also emphasizing software-driven innovation with continuous improvements and adaptability to market needs.
Sources: ntv.de, chr/dpa
In the face of this challenging competitive landscape, German auto suppliers are contemplating community policy changes to stay afloat, especially with financial concerns arising from high investment and cost pressure. To maintain their competitiveness, many are considering vocational training programs to adapt to the industry's shifting trends, such as the rise of electric vehicles and software-driven innovation, which Asian companies, particularly those from China, are excelling in due to their agile approach.
